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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-05-08 · 179 added, 335 removed, 144 unchanged (78% of the section changed)

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended March 31, 2024 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended September 30, 2024 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

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

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

The Company is a leading manufacturer, marketer, and seller of better-for-you brands that inspire healthier living.

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 worldwide.

The Company’s food and beverage brands include Celestial Seasonings ® , Clarks™, Cully & Sully ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , Garden of Eatin’ ® , Garden Veggie™, Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney’s ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co.

® , ParmCrisps ® , Robertson’s ® , Rose’s ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Gre ek Gods ® , Yorkshire Provender ® and Yves Veggie Cuisine ® .

The Company’s personal care brands include Alba Botanica ® , Avalon Organics ® , JASON ® , Live Clean ® and Queen Helene ® .

The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), is a leading global health and wellness company whose purpose is to inspire healthier living for people, communities and the planet through better-for-you brands.

For more than 30 years, Hain Celestial has intentionally focused on delivering nutrition and well-being that positively impacts today and tomorrow.

Headquartered in Hoboken, N.J., Hain Celestial’s products across snacks, baby & kids, beverages, meal preparation, and personal care, are marketed and sold in over 70 countries around the world.

The Company operates under two reportable segments:

North America and International.

The Company’s leading brands include Garden Veggie Snacks , Terra ® chips, Garden of Eatin’ ® snacks, Hartley’s ® Jelly, Earth’s Best ® and Ella’s Kitchen ® baby and kids foods, Celestial Seasonings ® teas, Joya ® and Natumi ® plant-based beverages, Greek Gods ® yogurt, Cully & Sully ® , Yorkshire Provender ® , New Covent Garden ® and Imagine ® soups, Yves ® and Linda McCartney’s ® (under license) meat-free, and Avalon Organics ® personal care, among others.

Hain Reimagined Program

During the first quarter of fiscal year 2024, we initiated a multi-year growth, transformation and restructuring program (the “Hain Reimagined Program”) to drive shareholder returns.

The savings initiatives are expected to impact our reportable segments and Corporate and Other.

During the first quarter of fiscal year 2024, we initiated a multi-year growth, transformation and restructuring program (the “Hain Reimagined Program”) intended to drive shareholder returns.

The savings initiatives impact our reportable segments and Corporate and Other.

The program is intended to optimize our portfolio, improve underlying profitability and increase our flexibility to invest in targeted growth initiatives, brand building and other capabilities critical to delivering future growth.

Hain Reimagined Program is grounded on four strategic pillars:

◦ Concentrate our portfolio in five consumer-centric Better-For-You (“BFY”) platforms:

The Hain Reimagined Program is grounded on four strategic pillars:

o Concentrate our portfolio in five consumer-centric Better-For-You (“BFY”) platforms:

Snacks, Baby & Kids, Beverages, Meal Preparation, and Personal Care.

◦ Simplify our footprint, maintaining direct presence in five key markets – United States, Canada, UK, Ireland, and Western Europe – and align our global operating model and footprint, leveraging scale and realizing synergies across the business.

◦ Deliver share gain in key platforms where we have the most compelling right to win, through expanded channel reach and acceleration in its innovation pipeline.

◦ Enhance critical capabilities in brand building and effectiveness of marketing spend;

o Simplify our footprint, maintaining direct presence in five key markets – United States (“U.S.”), Canada, United Kingdom (“U.K.”), Ireland, and Western Europe – and align our global operating model and footprint, leveraging scale and realizing synergies across the business.

o Deliver share gain in key platforms where we have the most compelling right to win, through expanded channel reach and acceleration in our innovation pipeline.

o Enhance critical capabilities in brand building and effectiveness of marketing spend;

expand reach across under-penetrated margin-accretive channels such as away-from-home and omni-channel e-commerce;

and enhance our innovation capability to be more leading edge in BFY.

◦ Drive revenue growth management, working capital management and operational efficiency to fund growth and enhance margins.

Cumulative pretax charges are expected to be $115 million - $125 million inclusive of potential inventory reductions of approximately $25 million related to brand/category exits.

o Drive revenue growth management, working capital management and operational efficiency to fund growth and enhance margins.

Implementation of the Hain Reimagined Program is expected to be completed by the end of the 2027 fiscal year.

Cumulative pretax charges associated with the Hain Reimagined Program are expected to be $115 million - $125 million inclusive of potential inventory write-downs of approximately $25 million related to brand/category exits.

The balance of cumulative pretax restructuring charges is expected to be $90 million - $100 million comprised of contract termination costs, asset write-downs, employee-related costs and other transformation-related expenses.

For the three and nine months ended March 31, 2024, we incurred approximately $10 million and $50 million, respectively, of expenses associated with the Company’s restructuring program.

For the three months ended September 30, 2024, we incurred approximately $5 million of expenses associated with the Hain Reimagined Program, compared to $10 million in the prior year

Annualized pretax savings are expected to be $130 million - $150 million.

As part of the Hain Reimagined Program, we initiated actions to consolidate our personal care manufacturing footprint and rationalize certain product categories for greater capacity utilization, cost reduction and margin expansion.

The Company also simplified its distribution footprint in the U.S.

and initiated actions to exit its non-strategic joint venture in India as part of the Focus and Fuel pillars of Hain Reimagined Program.

Implementation of the Hain Reimagined Program is expected to be completed by the end of the 2027 fiscal year.

As part of the Hain Reimagined Program, the Company completed the sale of three non-core brands during the fourth quarter of fiscal 2024 and first quarter of fiscal 2025.

We initiated actions to consolidate our personal care manufacturing footprint, which were substantially completed in the first quarter of fiscal 2025.

The Company also initiated actions to:

(i) simplify its distribution footprint in the U.S.;

(ii) rationalize certain product categories for greater capacity utilization, cost reduction and margin expansion;

(iii) reduce office space;

and (iv) exit its non-strategic joint venture in India as part of the Focus and Fuel pillars of the Hain Reimagined Program.

Global Economic Environment

The duration and intensity of inflation fluctuations, the possibility of an impending recession, alterations in consumer shopping and consumption patterns, and shifts in geopolitical events, such as the ongoing Russia-Ukraine conflict and the continuing Gaza Strip conflict, may lead to increased supply chain expenses, higher inflation, and other business impacts.

The duration and intensity of inflation fluctuations, the possibility of an impending recession, alterations in consumer shopping and consumption patterns, and shifts in geopolitical events, such as the ongoing Russia-Ukraine conflict, may lead to increased supply chain expenses, and other business impacts.

We continually assess the nature and extent of these potential and evolving impacts on our business, consolidated operational results, liquidity, and capital resources.

Comparison of Three Months Ended March 31, 2024 to Three Months Ended March 31, 2023

Comparison of Three Months Ended September 30, 2024 to Three Months Ended September 30, 2023

Consolidated Results

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended March 31, 2024 and 2023 (amounts in thousands, other than per share data and percentages, which may not add due to rounding):

Three Months Ended Change in

March 31, 2024 March 31, 2023 Dollars Percentage

Net sales $ 438,358 100.0% $ 455,243 100.0% $ (16,885) (3.7)%

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended September 30, 2024 and 2023 (dollars in thousands, other than per share amounts and percentages, which may not add due to rounding):

Three Months Ended

September 30, 2024

September 30, 2023

Cost of sales

Gross profit 96,671 22.1% 97,479 21.4% (808) (0.8)%

Selling, general and administrative expenses

Intangibles and long-lived asset impairment 49,426 11.3% 156,583 34.4% (107,157) (68.4)%

Productivity and transformation costs

Amortization of acquired intangible assets

Operating loss (27,901) (6.4)% (140,926) (31.0)% 113,025 (80.2)%

Long-lived asset impairment

Operating income (loss)

Interest and other financing expense, net

Other expense, net 100 —% 439 0.1% (339) (77.2)%

Other expense (income), net

Loss before income taxes and equity in net loss of equity-method investees

1 unchanged sentence

Equity in net loss of equity-method investees

Net loss $ (48,194) (11.0)% $ (115,727) (25.4)% $ 67,533 (58.4)%

Adjusted EBITDA

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

Net sales for the three months ended March 31, 2024 were $438.4 million, a decrease of $16.9 million, or 3.7%, as compared to $455.2 million for the three months ended March 31, 2023.

Net sales, adjusted for the impact of divestitures and discontinued brands, decreased approximately $17.0 million, or 3.7%, from the prior year quarter due to a decline in the North America reportable segment, partially offset by growth in the International reportable segment.

The effect of fluctuations in foreign currency exchange rates increased net sales by $5.8 million.

Net sales for the three months ended September 30, 2024 were $394.6 million, a decrease of $30.4 million, or 7.2%, including an unfavorable impact of $13.1 million or 2.9% related to divestitures, discontinued brands and exited product categories and a favorable impact of $3.3 million or 0.8% from foreign exchange, as compared to the prior year quarter.

Organic net sales, defined as net sales adjusted to exclude the impact of foreign exchange, acquisitions, divestitures, discontinued brands and exited product categories, decreased $20.6 million, or 5.1%, from the prior year quarter.

Additionally, the decrease in organic net sales was comprised of a 4% decrease in volume/mix and a 1% decrease in price.

The decrease in each of net sales and organic net sales was primarily due to declines in both the North America and International reportable segments.

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

Gross profit for the three months ended March 31, 2024 was $96.7 million, a decrease of $0.8 million, or 0.8%, as compared to the prior year quarter.

Gross profit margin of 22.1% was slightly higher when compared with 21.4% in the prior year quarter.

The decrease in gross profit was driven primarily by the North America reportable segment, mainly due to lower sales volume and recognition of charges in the three months ended March 31, 2024 associated with the consolidation of facilities, partially offset by improvements in pricing and productivity.

Gross profit in the International reportable segment increased for the three months ended March 31, 2024 compared to the prior year quarter mainly driven by lower cost of goods sold due to lower inflation and better prices on key commodities.

Gross profit for the three months ended September 30, 2024 was $81.6 million, a decrease of $2.3 million, or 2.8%, as compared to the prior year quarter.

However, gross profit margin of 20.7% for the three months ended September 30, 2024 was higher when compared with 19.7% in the prior year quarter.

The decrease in gross profit was driven primarily by the North America reportable segment, mainly due to lower sales volume, partially offset by favorable product mix and productivity improvements.

The International reportable segment had an increase in gross profit mainly driven by higher margin due to productivity and improved promotional efficiency, partially offset by lower volume.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $66.7 million for the three months ended March 31, 2024, a decrease of $8.3 million, or 11.1%, from $75.0 million for the prior year quarter.

The decrease was primarily due to a decrease in employee compensation-related expenses.

Intangibles and long-lived asset impairment

During the three months ended March 31, 2024, the Company recognized a non-cash impairment charge of $49.4 million primarily related to ParmCrisps ® , Thinsters ® , and certain North America personal care intangible asset impairment charges.

During the three months ended March 31, 2023, the Company recognized an aggregate non-cash impairment charge of $156.6 million, primarily related to the ParmCrisps ® and Thinsters ® indefinite-lived trademarks and ParmCrisps ® definite-lived customer relationships, which reduced the carrying amount of such assets to their estimated fair value.

See Note 8, Goodwill and Other Intangible Assets, and Note 14, Fair Value Measurements , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Selling, general and administrative expenses were $71.3 million for the three months ended September 30, 2024, a decrease of $5.8 million, or 7.6%, from $77.2 million for the prior year quarter.

The decrease was primarily due to lower marketing and advertising expense and employee-related expenses.

Productivity and Transformation Costs

Productivity and transformation costs were $7.2 million for the three months ended March 31, 2024, an increase of $3.2 million from $3.9 million in the prior year quarter.

The increase was primarily due to the recognition of restructuring costs incurred in connection with the Hain Reimagined Program, including reorganization of global functions and related personnel resource requirements and rationalizing our sourcing and supply chain processes.

Productivity and transformation costs were $5.0 million for the three months ended September 30, 2024, a decrease of $1.4 million, or 21.6%, from $6.4 million in the prior year quarter.

The decrease was primarily due to lower restructuring costs incurred in connection with the Hain Reimagined Program.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets was $1.3 million for the three months ended March 31, 2024, a decrease of $1.6 million from $2.8 million in the prior year quarter, primarily reflecting reduced amortization expenses due to impairment of the ParmCrisps ® customer relationships recognized in the third quarter of fiscal 2023.

See Note 8, Goodwill and Other Intangible Assets , in the Notes to the Consolidated Financial Statements included in Item 8 of the Form 10-K.

Operating Loss

Operating loss for the three months ended March 31, 2024 was $27.9 million compared to $140.9 million in the prior year quarter as a result of the items described above.

Amortization of acquired intangibles was $2.2 million for the three months ended September 30, 2024, an increase of $0.2 million from $2.0 million in the prior year quarter.

Long-Lived Asset Impairment

During the three months ended September 30, 2023, the Company recognized a non-cash impairment charge of $0.7 million related to certain equipment in North America.

Operating Income (Loss)

Operating income for the three months ended September 30, 2024 was $3.1 million compared to an operating loss of $2.3 million in the prior year quarter as a result of the items described above.

Interest and Other Financing Expense, Net

Interest and other financing expense, net totaled $14.1 million for the three months ended March 31, 2024, an increase of $0.7 million, or 5.3%, from $13.4 million in the prior year quarter.

Interest and other financing expense, net totaled $13.7 million for the three months ended September 30, 2024, an increase of $0.5 million, or 3.8%, from $13.2 million in the prior year quarter.

The increase resulted primarily from higher borrowing rates, partially offset by a lower outstanding debt balance compared to the prior year quarter.

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

Other Expense, Net

Other expense, net was $0.1 million for the three months ended March 31, 2024, compared to $0.4 million in the prior year quarter.

The decrease in other expense, net was primarily attributable to lower foreign currency losses.

Other Expense (Income), Net

Other expense, net totaled $5.3 million for the three months ended September 30, 2024, compared to $0.3 million of other income, net in the prior year quarter.

The change primarily reflected the recognition of a $3.9 million pretax loss on the sale of the ParmCrisps ® business in the first quarter of 2024 and higher net unrealized foreign currency losses.

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

Loss before income taxes and equity in net loss of our equity-method investees for the three months ended March 31, 2024 was $42.1 million compared to $154.8 million in the prior year quarter.

The change was due to the items discussed above.

Loss before income taxes and equity in net loss of our equity-method investees for the three months ended September 30, 2024 was $16.0 million compared to $15.3 million in the prior year quarter.

The increase in the loss before income taxes and equity in net loss of our equity-method investees was due to the items discussed above.

Provision (Benefit) for Income Taxes

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

Our income tax expense was $5.1 million for the three months ended March 31, 2024 compared to a benefit of $39.6 million in the prior year quarter.

The effective income tax rate was an expense of 12.1% and a benefit of 25.6% for the three months ended March 31, 2024 and 2023, respectively.

The effective income tax rate for the three months ended March 31, 2024 was impacted by an increase in the federal and state valuation allowance, tax expense related to stock-based compensation, global intangible low-taxed income (“GILTI”), and limitations on the deductibility of executive compensation.

The effective income tax rate for the three months ended March 31, 2023 was impacted by ParmCrisps ® and Thinsters ® trademarks and ParmCrisps ® asset group impairment charges, stock-based compensation and changes in uncertain tax positions.

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

Our income tax expense was $3.5 million for the three months ended September 30, 2024 compared to benefit of $5.4 million in the prior year quarter.

The effective income tax rate was an expense of 22.0% and a benefit of 35.3% for the three months ended September 30, 2024 and 2023, respectively.

The income tax expense for the three months ended September 30, 2024 reflected foreign tax expense in certain jurisdictions and an increase in the valuation allowance for both federal and state income taxes.

Equity in Net Loss of Equity-Method Investees

Our equity in net loss from our equity-method investments for the three months ended March 31, 2024 and 2023 was $1.0 million and $0.5 million, respectively.

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

Net loss for the three months ended March 31, 2024 was $48.2 million, or $0.54 per diluted share, compared to $115.7 million, or $1.29 per diluted share, in the prior year quarter.

The change was attributable to the factors noted above.

Equity in net loss from our equity-method investments for the three months ended September 30, 2024 was a loss of $0.2 million compared to a $0.5 million loss in the prior year quarter.

Net loss for the three months ended September 30, 2024 was $19.7 million, or $0.22 per diluted share, compared to $10.4 million, or $0.12 per diluted share, in the prior year quarter.

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

Adjusted EBITDA

Our Adjusted EBITDA was $43.8 million and $37.3 million for the three months ended March 31, 2024 and 2023, respectively, as a result of the factors discussed above and the adjustments described in the Reconciliation of Non-U.S.

Adjusted EBITDA was $22.4 million and $24.1 million for the three months ended September 30, 2024 and 2023, respectively, as a result of the factors discussed above.

See Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

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

GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net loss to Adjusted EBITDA.

Segment Results

Our organizational structure consists of two geographic based reportable segments:

North America and International, which are also the operating segments.

This structure is in line with how the Company’s Chief Operating Decision Maker (“CODM”) assesses the Company’s performance and allocates resources.

The Company uses segment net sales and segment Adjusted EBITDA in order to analyze segment results and trends.

Segment Adjusted EBITDA excludes:

net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses, certain litigation and related costs, plant closure related costs, net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, net, costs associated with acquisitions, divestitures and other transactions, (gain) loss on sale of assets, inventory write-downs related to exited categories, intangibles and long-lived asset impairments and other adjustments.

In addition, Segment Adjusted EBITDA does not include Corporate and Other expenses related to the Company’s centralized administrative functions, which do not specifically relate to a reportable segment.

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

We do not allocate amounts below operating (loss) income to our reportable segments.

The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the three months ended March 31, 2024 and 2023:

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

The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the three months ended September 30, 2024 and 2023:

(Dollars in thousands)

International

Three months ended 9/30/24

Three months ended 9/30/23

$ change $ (18,542) $ 1,657 n/a $ (16,885)

% change (6.5) % 1.0 % n/a (3.7) %

Adjusted EBITDA

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Three months ended 9/30/23

$ change $ 690 $ 3,278 $ 2,534 $ 6,502

% change 2.5 % 15.4 % 22.6 % 17.5 %

Adjusted EBITDA margin

Three months ended 03/31/24 10.4 % 14.4 % n/a 10.0 %

Three months ended 03/31/23 9.5 % 12.6 % n/a 8.2 %

See the Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

GAAP Measures following the discussion of our results of operations and Note 18, Segment Information , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a reconciliation of segment Adjusted EBITDA.

North America

Our net sales in the North America reportable segment for the three months ended March 31, 2024 were $268.1 million, a decrease of $18.5 million, or 6.5%, from net sales of $286.6 million in the prior year quarter.

The decrease in net sales was primarily due to lower sales in the personal care category on account of distribution losses and lower sales in the baby/kids category due to continued challenges in organic formula supply, partially offset by growth in the beverages category.

Adjusted EBITDA for the three months ended March 31, 2024 was $27.9 million, an increase of $0.7 million, or 2.5%, from Adjusted EBITDA of $27.2 million in the prior year quarter.

The increase in Adjusted EBITDA reflected lower selling, general and administrative expenses primarily associated with reduced compensation-related costs and operating-model savings, partially offset by reduced gross profit reflecting lower sales volume and the impact of inflation.

Adjusted EBITDA margin was 10.4%, a 90-basis point increase from the prior year period.

International

Net sales in the International reportable segment for the three months ended March 31, 2024 were $170.3 million, an increase of $1.7 million, or 1.0%, from net sales of $168.6 million in the prior year quarter.

The net sales increase was mainly driven by growth in the beverages category due to pricing and strong private label performance, partially offset by a decline in the meal preparation category.

The increase also reflected 3.4% of growth from the favorable impact of foreign exchange.

Adjusted EBITDA for the three months ended March 31, 2024 was $24.5 million, an increase of $3.3 million, or 15.4%, from Adjusted EBITDA of $21.3 million in the prior year quarter.

The increase was primarily driven by an increase in gross profit reflecting higher net sales due to pricing, partially offset by lower volumes.

Adjusted EBITDA margin was 14.4%, a 180-basis point increase from the prior year period.

Corporate and Other

The decrease in Corporate and Other expenses primarily reflected a reduction in compensation-related expenses.

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

Comparison of Nine Months Ended March 31, 2024 to Nine Months Ended March 31, 2023

Consolidated Results

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the nine months ended March 31, 2024 and 2023 (amounts in thousands, other than per share data and percentages, which may not add due to rounding):

Nine Months Ended Change in

March 31, 2024 March 31, 2023 Dollars Percentage

Net sales $ 1,317,487 100.0% $ 1,348,802 100.0% $ (31,315) (2.3)%

Cost of sales 1,034,658 78.5% 1,053,131 78.1% (18,473) (1.8)%

Gross profit 282,829 21.5% 295,671 21.9% (12,842) (4.3)%

Selling, general and administrative expenses 217,837 16.5% 222,355 16.5% (4,518) (2.0)%

Intangibles and long-lived asset impairment 70,786 5.4% 156,923 11.6% (86,137) (54.9)%

Productivity and transformation costs 20,447 1.6% 5,692 0.4% 14,755 259.2%

Amortization of acquired intangible assets 4,719 0.4% 8,415 0.6% (3,696) (43.9)%

Operating loss (30,960) (2.3)% (97,714) (7.2)% 66,754 (68.3)%

Interest and other financing expense, net 43,509 3.3% 31,910 2.4% 11,599 36.3%

Other income, net (207) —% (2,413) (0.2)% 2,206 (91.4)%

Loss before income taxes and equity in net loss of equity-method investees (74,262) (5.6)% (127,211) (9.4)% 52,949 (41.6)%

Benefit for income taxes (4,528) (0.3)% (30,599) (2.3)% 26,071 (85.2)%

Equity in net loss of equity-method investees 2,371 0.2% 1,226 0.1% 1,145 93.4%

Net loss $ (72,105) (5.5)% $ (97,838) (7.3)% $ 25,733 (26.3)%

Adjusted EBITDA $ 114,978 8.7% $ 123,106 9.1% $ (8,128) (6.6)%

Diluted net loss per common share $ (0.80) $ (1.09) $ 0.29 (26.6)%

Net sales for the nine months ended March 31, 2024 were $1,317.5 million, a decrease of $31.3 million, or 2.3%, as compared to $1,348.8 million for the nine months ended March 31, 2023.

Net sales, adjusted for the impact of divestitures and discontinued brands, decreased approximately $28.5 million, or 2.1%, from the prior comparable period due to a decline in the North America reportable segment, partially offset by growth in the International reportable segment.

The effect of fluctuations in foreign currency exchange rates increased net sales by $26.6 million.

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

Gross profit for the nine months ended March 31, 2024 was $282.8 million, a decrease of $12.8 million, or 4.3%, as compared to the prior year comparable period.

Gross profit margin was 21.5% of net sales, compared to 21.9% in the prior year comparable period.

The decrease in gross profit was driven primarily by the North America reportable segment, mainly due to lower sales volume as well as by inflation, partially offset by pricing and productivity.

Gross profit in the International reportable segment increased during the nine months ended March 31, 2024 compared to the prior year period, mainly driven by higher net sales due to pricing.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $217.8 million for the nine months ended March 31, 2024, a decrease of $4.5 million, or 2.0%, from $222.4 million for the prior year comparable period.

The decrease was primarily due to lower employee compensation-related expenses.

Intangibles and long-lived asset impairment

During the nine months ended March 31, 2024, the Company recognized aggregate impairment charges of $70.8 million, a decrease of $86.1 million from $156.9 million in the prior year comparable period.

The decrease was due to higher impairment charges related to the ParmCrisps ® and Thinsters ® indefinite-lived trademarks and ParmCrisps ® definite-lived customer relationships, recorded in the prior year comparable period.

Results for the nine months ended March 31, 2024 included the recognition of a $20.7 million charge related to a decline in actual and projected performance and cash flows related to an asset group primarily comprised of certain production assets in the North America reportable segment.

See Note 6, Property, Plant and Equipment, Net, and Note 14, Fair Value Measurements , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

In addition, results for the nine months ended March 31, 2024 also included non-cash impairment charges of $42.2 million primarily related to ParmCrisps ® , Thinsters ® , and certain North America personal care intangible assets.

See Note 8, Goodwill and Other Intangible Assets, and Note 14, Fair Value Measurements , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Productivity and Transformation Costs

Productivity and transformation costs were $20.4 million for the nine months ended March 31, 2024, an increase of $14.8 million from $5.7 million in the prior year comparable period.

Amortization of Acquired Intangible Assets

Amortization of acquired intangibles was $4.7 million for the nine months ended March 31, 2024, a decrease of $3.7 million from $8.4 million in the prior year comparable period, primarily reflecting reduced amortization expenses due to impairment of the ParmCrisps ® customer relationships recognized in the third quarter of fiscal 2023.

See Note 8, Goodwill and Other Intangible Assets , in the Notes to the Consolidated Financial Statements included in Item 8 of the Form 10-K.

Operating Loss

Operating loss for the nine months ended March 31, 2024 was $31.0 million compared to $97.7 million in the prior year comparable period as a result of the items described above.

Interest and Other Financing Expense, Net

Interest and other financing expense, net totaled $43.5 million for the nine months ended March 31, 2024, an increase of $11.6 million, or 36.3%, from $31.9 million in the prior year comparable period.

The increase resulted primarily from higher borrowing rates, partially offset by a lower outstanding debt balance compared to the prior year comparable period.

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

Other Income, Net

Other income, net totaled $0.2 million for the nine months ended March 31, 2024, compared to $2.4 million in the prior year comparable period.

The decrease in other income, net was primarily attributable to lower foreign currency gains.

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

Loss before income taxes and equity in net loss of our equity-method investees for the nine months ended March 31, 2024 was $74.3 million compared to $127.2 million in the prior year comparable period.

The decrease was due to the items discussed above.

Benefit for Income Taxes

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

Our income tax benefit was $4.5 million for the nine months ended March 31, 2024 compared to $30.6 million in the prior year comparable period.

The effective income tax rate was a benefit of 6.1% and 24.1% for the nine months ended March 31, 2024 and 2023, respectively.

The effective income tax rate for the nine months ended March 31, 2024 was impacted by an increase in the federal and state valuation allowance, tax expense related to stock-based compensation, GILTI, and limitations on the deductibility of executive compensation.

The effective income tax rate for the nine months ended March 31, 2023 was impacted by ParmCrisps ® and Thinsters ® trademarks and ParmCrisps ® asset group impairment charges, gain on the sale of Westbrae, an operating lease modification during the second quarter of fiscal 2023, severance with respect to our former CEO (as part of the limitation on the deductibility of executive compensation), stock-based compensation and changes in uncertain tax positions.

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

Equity in Net Loss of Equity-Method Investees

Our equity in net loss from our equity-method investments for the nine months ended March 31, 2024 was $2.4 million compared to $1.2 million in the prior year comparable period.

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

Net loss for the nine months ended March 31, 2024 was $72.1 million, or $0.80 per diluted share, compared to $97.8 million, or $1.09 per diluted share, in the prior year comparable period.

The change was attributable to the factors noted above.

Adjusted EBITDA

Our Adjusted EBITDA was $115.0 million and $123.1 million for the nine months ended March 31, 2024 and 2023, respectively, as a result of the factors discussed above, and the adjustments described in the Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

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

Segment Results

The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the nine months ended March 31, 2024 and 2023:

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

Nine months ended 03/31/24 $ 795,832 $ 521,655 $ — $ 1,317,487

Nine months ended 03/31/23 857,406 491,396 — 1,348,802

$ change $ (61,574) $ 30,259 n/a $ (31,315)

% change (7.2) % 6.2 % n/a (2.3) %

Adjusted EBITDA

Nine months ended 03/31/24 $ 77,828 $ 67,953 $ (30,803) $ 114,978

Nine months ended 03/31/23 96,484 55,458 (28,836) 123,106

$ change $ (18,656) $ 12,495 $ (1,967) $ (8,128)

% change (19.3) % 22.5 % (6.8) % (6.6) %

Adjusted EBITDA margin

Nine months ended 03/31/24 9.8 % 13.0 % n/a 8.7 %

Nine months ended 03/31/23 11.3 % 11.3 % n/a 9.1 %

Three months ended 9/30/24

Three months ended 9/30/23

See the Reconciliation of Non-U.S.

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North America

Our net sales in the North America reportable segment for the nine months ended March 31, 2024 were $795.8 million, a decrease of $61.6 million, or 7.2%, from net sales of $857.4 million in the prior year comparable period.

The decrease in net sales was primarily due to lower sales in the baby/kids category on account of continued industry-wide challenges in organic formula supply, a decline in the personal care and meal preparation categories on account of distribution losses as well as lower sales in the snacks category.

Adjusted EBITDA for the nine months ended March 31, 2024 was $77.8 million, a decrease of $18.7 million, or 19.3%, from Adjusted EBITDA of $96.5 million in the prior year comparable period.

The decrease was primarily driven by reduced gross profit reflecting the reduction in net sales discussed above and inflation, partially offset by improvements in productivity.

Our net sales in the North America reportable segment for the three months ended September 30, 2024 were $231.1 million, a decrease of $28.9 million, or 11.1%, including an unfavorable impact of $12.9 million or 4.4% related to divestitures, discontinued brands and exited product categories, as compared to the prior year quarter.

Organic net sales decreased $15.5 million, or 6.5% to $223.6 million from $239.1 million in the prior year quarter.

The decrease in each of net sales and organic net sales was primarily due to lower sales in the snacks category, as expected, due to the timing shift of a promotional event that was held in the first quarter of last fiscal year into the third quarter of the current fiscal year, as well as by a decline in the meal preparation category, partially offset by growth in the beverages category.

Adjusted EBITDA for the three months ended September 30, 2024 was $12.5 million, a decrease of $6.3 million, or 33.5%, from Adjusted EBITDA of $18.7 million in the prior year quarter.

The decrease was primarily driven by lower volume and inflation, partially offset by productivity.

Adjusted EBITDA margin was 5.4%, a 180-basis point decrease from the prior year period.

International

Net sales in the International reportable segment for the nine months ended March 31, 2024 were $521.7 million, an increase of $30.3 million, or 6.2%, from net sales of $491.4 million in the prior year comparable period.

The increase reflected 5.6% of growth from the favorable impact of foreign currency exchange rates.

The remainder of the net sales increase was mainly driven by growth in the meal preparation and beverages categories due to pricing and strong private label performance.

Adjusted EBITDA for the nine months ended March 31, 2024 was $68.0 million, an increase of $12.5 million, or 22.5%, from Adjusted EBITDA of $55.5 million in the prior year comparable period.

The increase was primarily driven by an increase in gross profit reflecting higher net sales due to pricing, partially offset by inflation and an increase in selling, general and administrative expenses primarily due to increase in employee compensation-related expenses.

Our net sales in the International reportable segment for the three months ended September 30, 2024 were $163.5 million, a decrease of $1.5 million, or 0.9%, including a favorable impact of $3.9 million or 2.3% related to foreign exchange, as compared to the prior year quarter.

Organic net sales decreased $5.1 million or 3.1% to $159.4 million from $164.5 million the prior year quarter.

The decrease in net sales was primarily due to lower sales in the beverages and baby & kids categories on account of lower branded sales.

The decrease in organic net sales was primarily due to lower sales in the meal preparation and baby & kids categories.

The decrease in the meal preparation category was due to short-term softness in private label spreads and drizzles, partially offset by strong soup performance across brands.

Baby & kids category net sales were lower due to lower branded sales.

Adjusted EBITDA for the three months ended September 30, 2024 was $20.4 million, an increase of $2.9 million, or 16.8%, from Adjusted EBITDA of $17.4 million in the prior year quarter.

The increase was primarily driven by an increase in gross

profit reflecting improved margin associated with productivity improvements and improved promotional efficiency, partially offset by lower volume and a decrease in selling, general and administrative expenses.

Adjusted EBITDA margin was 12.5%, a 190-basis point increase from the prior year period.

Corporate and Other

The increase in Corporate and Other expenses primarily reflected an increase in consulting charges.

The decrease in Corporate and Other expenses primarily reflected a decrease in consulting charges.

Refer to Note 17, Segment Information , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

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Amended and Restated Credit Agreement

On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement (as amended by a First Amendment dated December 16, 2022, the “Credit Agreement”).

On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement (as amended, the “Credit Agreement”).

The Credit Agreement provides for senior secured financing of $1,100 million in the aggregate, consisting of (1) $300 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and is comprised of a $440 million U.S.

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Both the Revolver and the Term Loans mature on December 22, 2026.

The Company’s obligations under the Credit Agreement are guaranteed by certain existing and future domestic subsidiaries of the Company and are secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interest in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions.

The Credit Agreement includes financial covenants that require compliance with a consolidated secured leverage ratio, a consolidated leverage ratio and a consolidated interest coverage ratio.

Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 until September 30, 2023, 5.25:1.00 until December 31, 2023 and 5.00:1.00 until December 31, 2024 (the period of time during which such maximum consolidated secured leverage ratios are in effect, the “Second Amendment Period,” which the Company may elect to end early).

Following the Second Amendment Period, the maximum consolidated secured leverage ratio will be 4.25:1.00, subject to possible temporary increase following certain corporate acquisitions.

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Pursuant to the Second Amendment, the Company’s minimum interest coverage ratio was amended to be 2.50:1.00.

As of March 31, 2024, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 3.85:1.00, 3.85:1.00 and 3.49:1.00, respectively, and the Company was in compliance with all associated covenants.

During the Second Amendment Period, loans under the Credit Agreement will bear interest at (a) Term SOFR plus 2.5% per annum or (b) the Base Rate plus 1.5% per annum.

Following the Second Amendment Period, Loans will bear interest at rates based on (a) Term SOFR plus a rate ranging from 1.125% to 2.0% per annum or (b) the Base Rate plus a rate ranging from 0.125% to 1.0% per annum, the relevant rate in each case being the Applicable Rate.

The Applicable Rate following the Second Amendment Period will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement as amended by the Second Amendment.

The weighted average interest rate on outstanding borrowings under the Credit Agreement at March 31, 2024 was 8.10%.

As of September 30, 2024, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 3.87:1.00, 3.87:1.00 and 3.26:1.00, respectively, and the Company was in compliance with all associated covenants.

The aforementioned financial covenants are being reported as calculated under the Credit Agreement and not pursuant to U.S.

Please refer to the Credit Agreement filed as an exhibit to our periodic reports for further information related to the calculation thereof.

For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor “Any default under our credit agreement could have significant consequences” set forth in Part I, Item 1A of our most recent annual report on Form 10-K.

During the Second Amendment Period, loans under the Credit Agreement bear interest at (a) Term SOFR plus 2.5% per annum or (b) the Base Rate plus 1.5% per annum.

Following the Second Amendment Period, loans bear interest at rates based on (a) Term SOFR plus a rate ranging from 1.125% to 2.0% per annum or (b) the Base Rate plus a rate ranging from 0.125% to 1.0% per annum, the relevant rate in each case being the Applicable Rate.

The Applicable Rate following the Second Amendment

Period is determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement as amended by the Second Amendment.

Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2024 was 7.76%.

During fiscal 2022, the Company used interest rate swaps to hedge a portion of the interest rate risk related its outstanding variable rate debt.

As of September 30, 2024, the notional amount of the interest rate swaps was $400 million with fixed rate payments of 5.60%.

Including the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2024 was 6.56%.

Additionally, the Credit Agreement contains a Commitment Fee (as defined in the Credit Agreement) 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.

As of March 31, 2024, there were $496,000 of loans under the Revolver, $283,125 of Term Loans, and $3,188 letters of credit outstanding under the Credit Agreement.

As of March 31, 2024, $300,812 was available under the Credit Agreement, subject to compliance with the financial covenants.

In addition to obligations under the Credit Agreement, we are party to other contractual obligations involving commitments to make payments to third parties, including purchase commitments and lease obligations, which impact our short-term and long-term liquidity and capital resource needs.

See Note 7, Leases , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Our cash and cash equivalents balance decreased $3.8 million at March 31, 2024 to $49.5 million as compared to $53.4 million at June 30, 2023.

Our working capital was $299.6 million at March 31, 2024, a decrease of $59.3 million from $358.9 million at the end of fiscal 2023.

Additionally, our total debt decreased by $51.2 million at March 31, 2024 to $777.5 million as compared to $828.7 million at June 30, 2023 as a result of $50.6 million of net repayments carried out during the period.

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

As of March 31, 2024, substantially all cash was held outside of the United States.

As of September 30, 2024, there were $473,000 of loans under the Revolver, $268,675 of Term Loans, and $3,247 of letters of credit outstanding under the Credit Agreement.

As of September 30, 2024, $323,753 was available under the Credit Agreement, subject to compliance with the financial covenants.

As of September 30, 2024, the Company was in compliance with all associated covenants.

Our cash and cash equivalents balance increased by $2.5 million at September 30, 2024 to $56.9 million as compared to $54.3 million at June 30, 2024.

Our working capital was $283.3 million at September 30, 2024, an increase of $7.8 million from $275.6 million at the end of fiscal 2024.

Additionally, our total debt decreased by $3.7 million at September 30, 2024 to $740.4 million as compared to $744.1 million at June 30, 2024 as a result of net repayments carried out during the period.

Our cash balances are held in the U.S., U.K., Canada, Western Europe, the Middle East and India.

As of September 30, 2024, substantially all cash was held outside of the U.S.

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

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

Nine Months Ended March 31, Change in

(amounts in thousands) 2024 2023 Dollars

Cash flows provided by (used in):

Three Months Ended September 30,

(Dollars in thousands)

Cash flows (used in) provided by:

Operating activities

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Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents $ (3,815) $ (21,830) $ 18,015

Cash provided by operating activities was $77.0 million for the nine months ended March 31, 2024, an increase of $50.7 million from $26.3 million in the prior year period.

This increase versus the prior period resulted primarily from higher cash generation of $81.9 million from our working capital accounts, which was driven by our accounts payable optimization initiatives and focused inventory management, partially offset by a reduction in accounts receivable recovery.

The increase was also partially offset by a reduction of $31.2 million in net loss adjusted for non-cash charges in the current period.

Cash used in investing activities was $23.2 million for the nine months ended March 31, 2024, an increase of $10.0 million from $13.2 million in the prior year period primarily due to higher capital expenditure in the current period by $3.3 million on account of phasing of capital projects and receipt of $7.5 million of proceeds from the divestiture of Westbrae during the prior year period ended March 31, 2023.

Cash used in financing activities was $56.1 million for the nine months ended March 31, 2024, an increase of $21.3 million compared to $34.8 million in the prior year period.

The increase in cash used in financing activities was primarily due to higher net debt repayment during the nine months ended March 31, 2024.

Net increase (decrease) in cash and cash equivalents

Cash used in operating activities was $10.8 million for the three months ended September 30, 2024, a decrease of $24.8 million from cash provided by operating activities of $14.0 million in the prior year period.

This increase in cash used in operating activities versus the prior year period resulted primarily from higher cash utilization of $28.9 million for our working capital accounts which was mainly due to lower accounts payable and accrued expenses of $22.8 million, primarily reflecting timing of payments to suppliers in North America and cash restructuring charges, partially offset by focused inventory management, which generated year-over-year improvement of $9.7 million as well as a reduction of $4.1 million in net loss adjusted for non-cash charges.

Cash provided by investing activities was $6.3 million for the three months ended September 30, 2024, an increase of $12.0 million from cash used in investing activities of $5.6 million in the prior year period primarily due to an increase in proceeds from asset sales of $10.8 million and lower capital expenditures in the current period due to phasing of capital projects.

During the three months ended September 30, 2024, $5.8 million of capital expenditures were incurred primarily related to operational improvements in the United States and United Kingdom.

We expect capital expenditures to be approximately $50 million for fiscal year 2025.

Cash used in financing activities was $4.2 million for the three months ended September 30, 2024, a decrease of $13.4 million compared to $17.6 million in the prior year period.

The decrease in cash used in financing activities was primarily due to lower net debt repayment during the three months ended September 30, 2024.

Free Cash Flow

Our free cash flow was $52.2 million for the nine months ended March 31, 2024, an increase of $47.3 million from $4.9 million in the nine months ended March 31, 2023.

This increase versus the prior year period resulted primarily from an increase in cash flows from operations of $50.7 million driven by the reasons explained above.

Our free cash flow was negative $16.5 million for the three months ended September 30, 2024, a decrease of $23.7 million from free cash flow of $7.1 million in the three months ended September 30, 2023.

The period-over-period change resulted primarily from a decrease in cash flows from operations of $24.8 million driven by the reasons explained above, partially offset by lower capital expenditures.

See Reconciliation of Non-U.S.

GAAP Financial Measures to U.S.

GAAP Measures following the discussion of our results of operations for definitions and a reconciliation from our net cash provided by operating activities to free cash flow.

GAAP Measures following the discussion of our results of operations for definitions and a reconciliation from our net cash (used in) provided by operating activities to free cash flow.

Share Repurchase Program

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

During the nine months ended March 31, 2024, the Company repurchased no shares under the repurchase program.

As of March 31, 2024, the Company had $173.5 million of remaining authorization under the share repurchase program.

During the three months ended September 30, 2024, the Company did not repurchase any shares under the repurchase program.

As of September 30, 2024, the Company had $173.5 million of remaining authorization under the share repurchase program.

Reconciliation of Non-U.S.

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GAAP measures.

Net Sales - Adjusted for the Impact of Divestitures and Discontinued Brands

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

GAAP financial measures.

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

To present net sales adjusted for the impact of divestitures and discontinued brands, the net sales of a divested business or discontinued brand are excluded from all periods.

A reconciliation between reported net sales and net sales adjusted for the impact of divestitures and discontinued brands is as follows:

(amounts in thousands) North America International Hain Consolidated

Net sales - Three months ended March 31, 2024 $ 268,107 $ 170,251 $ 438,358

Divestitures and discontinued brands (307) — (307)

Net sales adjusted for divestitures and discontinued brands - Three months ended March 31, 2024 $ 267,800 $ 170,251 $ 438,051

Net sales - Three months ended March 31, 2023 $ 286,649 $ 168,594 $ 455,243

Divestitures and discontinued brands (163) — (163)

Net sales adjusted for divestitures and discontinued brands - Three months ended March 31, 2023 $ 286,486 $ 168,594 $ 455,080

Net sales (decline) growth (6.5) % 1.0 % (3.7) %

Impact of divestitures and discontinued brands — % — % — %

Net sales (decline) growth adjusted for divestitures and discontinued brands (6.5) % 1.0 % (3.7) %

Net sales - Nine months ended March 31, 2024 $ 795,832 $ 521,655 $ 1,317,487

Divestitures and discontinued brands (299) — (299)

Net sales adjusted for divestitures and discontinued brands - Nine months ended March 31, 2024 $ 795,533 $ 521,655 $ 1,317,188

Net sales - Nine months ended March 31, 2023 $ 857,406 $ 491,396 $ 1,348,802

Divestitures and discontinued brands (3,073) — (3,073)

Net sales adjusted for divestitures and discontinued brands - Nine months ended March 31, 2023 $ 854,333 $ 491,396 $ 1,345,729

Net sales (decline) growth (7.2) % 6.2 % (2.3) %

Impact of divestitures and discontinued brands 0.3 % — % 0.2 %

Net sales (decline) growth adjusted for divestitures and discontinued brands (6.9) % 6.2 % (2.1) %

Organic Net Sales

As noted above, we define organic net sales as net sales excluding the impact of acquisitions, divestitures, discontinued brands and exited product categories and foreign exchange.

To adjust organic net sales for the impact of acquisitions, the net sales of an acquired business are excluded from fiscal quarters constituting or falling within the current period and prior period where the applicable fiscal quarter in the prior period did not include the acquired business for the entire quarter.

To adjust organic net sales for the impact of divestitures, discontinued brands and exited product categories, the net sales of a divested business, discontinued brand or exited product category are excluded from all periods.

To adjust organic net sales for the impact of foreign exchange, current period net sales for entities reporting in currencies other than the U.S.

dollar are translated into U.S.

dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year.

A reconciliation between reported net sales and organic net sales is as follows:

(Dollars in thousands)

International

Net sales - Three months ended September 30, 2024

Divestitures, discontinued brands and exited product categories

Impact of foreign currency exchange

Organic net sales - Three months ended September 30, 2024

Net sales - Three months ended September 30, 2023

Divestitures, discontinued brands and exited product categories

Organic net sales - Three months ended September 30, 2023

Net sales decline

Impact of divestitures, discontinued brands and exited product categories

Impact of foreign currency exchange

Organic net sales decline

Adjusted EBITDA

The Company defines Adjusted EBITDA as net income before net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses (gains), certain litigation and related costs, CEO succession costs, plant closure related costs, net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, net, costs associated with acquisitions, divestitures and other transactions, (gains) losses on sales of assets, inventory write-downs related to exited categories, intangibles and long-lived asset impairment and other adjustments.

The Company defines Adjusted EBITDA as net loss before net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses, certain litigation expenses, net, plant closure related costs, net, productivity and transformation costs, costs associated with acquisitions, divestitures and other transactions, loss on sale of assets, long-lived asset impairment and other adjustments.

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

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

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

(amounts in thousands) 2024 2023 2024 2023

Net loss $ (48,194) $ (115,727) $ (72,105) $ (97,838)

Three Months Ended September 30,

(Dollars in thousands)

Depreciation and amortization

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Certain litigation expenses, net (a)

458 (1,582) 4,073 3,363

Restructuring activities

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Plant closure related costs, net

Warehouse/manufacturing consolidation and other costs, net 184 2,871 995 899

CEO succession — — — 5,113

Acquisitions, divestitures and other

Loss on sale of assets

Transaction and integration costs, net

(Gain) loss on sale of assets — (134) 62 (3,529)

Impairment charges

Intangibles and long-lived asset impairment 49,426 156,583 70,786 156,923

Inventory write-downs related to exited categories — — 1,443 —

Long-lived asset impairment

Adjusted EBITDA

(a) Expenses and items relating to securities class action, baby food litigation, and SEC investigation.

(a) Expenses and items relating to securities class action and baby food litigation and SEC investigation.

Free Cash Flow

In our internal evaluations, we use the non-GAAP financial measure “Free Cash Flow.” The difference between Free Cash Flow and cash flows provided by or used in operating activities, which is the most comparable U.S.

In our internal evaluations, we use the non-GAAP financial measure “Free Cash Flow.” The difference between Free Cash Flow and cash flows used in or provided by operating activities, which is the most comparable U.S.

GAAP financial measure, is that Free Cash Flow reflects the impact of purchases of property, plant and equipment (capital spending).

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We do not consider Free Cash Flow in isolation or as an alternative to financial measures determined in accordance with U.S.

A reconciliation from cash flows provided by operating activities to Free Cash Flow is as follows:

Nine Months Ended March 31,

(amounts in thousands) 2024 2023

Net cash provided by operating activities $ 76,959 $ 26,309

A reconciliation from cash flows (used in) provided by operating activities to Free Cash Flow is as follows:

Three Months Ended September 30,

(Dollars in thousands)

Net cash (used in) provided by operating activities

Purchases of property, plant and equipment

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The accounting policies that have been identified as critical to our business operations and to understanding the results of our operations pertain to variable consideration, valuation of long-lived assets, goodwill and intangible assets, stock-based compensation and valuation allowances for deferred tax assets.

The application of each of these critical accounting policies and estimates is discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, from which there have been no material changes, except for the items noted below.

Goodwill is not amortized but rather is tested at least annually for impairment, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable.

Goodwill is tested for impairment at the reporting unit level.

A reporting unit represents an operating segment or a component of an operating segment.

Goodwill is tested for impairment by either performing a qualitative evaluation or a two-step quantitative test.

The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

We may elect not to perform the qualitative assessment for some or all reporting units and perform a two-step quantitative impairment test.

The estimate of the fair values of our reporting units are based on the best information available as of the date of the assessment.

We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain.

We generally use a blended analysis of the present value of discounted cash flows and the market valuation approach.

The discounted cash flow model uses the present values of estimated future cash flows.

Considerable management judgment is necessary to evaluate the impact of operating and external economic factors in estimating our future cash flows.

The assumptions we use in our evaluations include projections of growth rates and profitability, our estimated working capital needs, as well as our weighted average cost of capital.

The market valuation approach indicates the fair value of a reporting unit based on a comparison to comparable publicly traded firms in similar businesses.

Estimates used in the market value approach include the identification of similar companies with comparable business factors.

These key assumptions are inherently uncertain and require a high degree of estimation and are subject to change based on, among others, industry and geopolitical conditions, our ability to navigate changing macroeconomic conditions and trends and the timing and success of strategic initiatives.

Changes in economic and operating conditions impacting the assumptions we made could result in additional goodwill impairment in future periods.

If the carrying amount of the reporting unit exceeds fair value, goodwill is considered impaired.

A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

We are providing the below update regarding goodwill.

In each quarter subsequent to our annual impairment assessment, we review events that occur or circumstances that change, including the macroeconomic environment, our business performance and our market capitalization, to determine if a quantitative impairment assessment is necessary.

If assumptions are not achieved or market conditions decline, potential impairment charges could result.

Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures, changes in discount rates based on changes in cost of capital (i.e., as a result of changes in interest rates or other conditions), lower than expected sales and profit growth rates, changes in industry EBITDA multiples, the inability to quickly replace lost co-manufacturing business, or the bankruptcy of a significant customer.

As a result of indicators of impairment which included significant decline in the Company’s market capitalization and impairment charges recorded during the three months ended March 31, 2024 within the United States (U.S.) reporting unit as noted in Note 8, Goodwill and Other Intangible Assets and Note 6, Property, Plant and Equipment, Net , the Company completed an interim impairment test of all reporting units.

For United Kingdom, Western Europe, Canada, and Ella's Kitchen UK, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill.

The Company concluded that the qualitatively tested reporting units estimated fair values exceeded their carrying amounts.

Three of these reporting units (United Kingdom, Western Europe and Canada) were quantitatively tested in fiscal 2023 and as of the last quantitative testing date, their estimated fair values exceeded their respective carrying amounts by more than 17.7%.

During the three months ended March 31, 2024, the Company completed an interim quantitative impairment test of goodwill in the U.S.

reporting unit and concluded that the reporting unit’s estimated fair value exceeded its carrying amount.

The fair value of the reporting unit was estimated utilizing a blended approach which included an income approach utilizing the Discounted Cash Flows (“DCF”) Method and the Guideline Public Company Methodology (“GPCM”), a market-based approach.

(Amounts in thousands, other than percentage)

Reporting Unit Fair Value Carrying Amount Dollars Percentage

United States (U.S.) $ 990,000 $ 941,277 $ 48,723 5.2 %

The United States reporting unit is at risk of impairment in the event of significant unfavorable changes in assumptions, including forecasted future cash flows based on execution of strategic initiatives for increasing revenue, as well as discount rates and other macroeconomic factors.

We monitor our reporting units at risk of impairment for interim impairment indicators and believe that the estimates and assumptions used in the calculations are reasonable as of March 31, 2024.

We performed qualitative procedures related to our other four reporting units, noting that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount as of March 31, 2024 .

Should the fair value of any of our reporting units fall below its carrying amount because of reduced operating performance, market declines including a deterioration of the macroeconomic factors, changes in the discount rate, or other adverse conditions, goodwill impairment charges may be necessary in future periods.

We performed a sensitivity test and noted that an increase in the U.S.

weighted average cost of capital (“WACC”) by 1 percentage point, holding other assumptions constant, would not result in recognition of an impairment charge.

The calculation of the U.S.

reporting unit WACC included a number of subjective inputs, including a company-specific risk premium of 4.0% to account for the riskiness of the assumed revenue growth and margin improvement within the financial forecasts used in the DCF Method.

We performed a market capitalization reconciliation with the expectation that the market capitalization should reconcile within a reasonable range of the sum of the fair values of the individual reporting units.

Such reconciliation often includes both qualitative and quantitative assessments as is the case with the Company’s reporting units as of March 31, 2024 .

When an entity performs a qualitative assessment for some reporting units but proceeds to a quantitative assessment for others, reconciling the overall market capitalization to the aggregate fair value of reporting units can be challenging and requires significant judgment.

There is no requirement to determine the fair value of reporting units for which only a qualitative impairment test is performed.

Therefore, when performing an overall comparison to market capitalization, we included the current year fair value for reporting units for which a quantitative measurement was performed, and we estimated the fair value for the reporting units for which qualitative assessments were performed using a reasonable methodology.

As of September 30, 2024, we performed an assessment of factors to determine whether it was more likely than not that the fair value of our reporting units was less than its carrying amount, including goodwill.

We concluded that were no events or circumstances that warranted an interim quantitative impairment test for goodwill during the three months ended September 30, 2024.

As of September 30, 2024, goodwill associated with the U.S.

reporting unit had a carrying value of $633,774.

reporting unit is at risk of impairment in the event of unfavorable changes in assumptions, including forecasted future cashflows based on execution of strategic initiatives for increasing revenue, as well as discount rates and other macroeconomic factors.

We monitor our reporting units at risk of impairment for interim impairment indicators.

As of September 30, 2024, we considered our market capitalization and our net book value and performed a market capitalization reconciliation with the expectation that the market capitalization should reconcile within a reasonable range to the sum of the fair values of the Company's individual reporting units.

Upon performing the market capitalization reconciliation, we noted a reasonable reconciliation between the sum of the reporting unit fair values and the Company’s market capitalization once adjusted for the impact of corporate costs not allocated to the reporting units.

Indefinite-Lived Intangible Assets

The Company performs an indefinite-lived asset impairment test annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

In accordance with ASC 350, we may first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test.

If an entity elects to perform a qualitative assessment, it first shall assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired.

One procedure we perform during interim periods to determine whether indicators of impairment are present includes a comparison of net sales used in the most recent quantitative impairment tests to forecasted net sales for the same fiscal year (or balance of the fiscal year when performing an interim review) in order to identify brands for which the current fiscal year net sales are expected to be lower than the forecasted fiscal year net sales per the latest quantitative test.

The performance of these brands is then reviewed by management to determine if the shortfall to forecasted net sales was related to events and circumstances that are expected to be temporary in nature, or if it was caused by more pervasive issue that could serve as in impairment indicator (e.g., loss of key customers, discontinuance of certain product categories within a brand, etc.).

We use this risk-based approach to determine which brands we would quantitatively test for impairment, whether as part of fiscal year annual impairment testing or an interim period test.

During the third quarter of 2024, we qualitatively assessed our indefinite-lived intangible assets for impairment and determined that the indefinite-lived tradenames for certain North America personal care tradenames (namely, Alba Botanica ® , Avalon Organics ® , and JASON ® ), ParmCrisps ® and Thinsters ® should be quantitatively tested.

The Company’s 2024 interim impairment testing resulted in the recognition of impairment charges for the following indefinite-lived tradenames, and other intangible assets:

ParmCrisps ® , Thinsters ® and certain North America personal care tradenames.

During the three months ended March 31, 2024, as a result of further expected decline in the actual and projected performance and cash flows, the Company completed an interim quantitative impairment test of indefinite-lived trademarks associated with certain North America personal care brands, as noted in Note 8, Goodwill and Other Intangible Assets.

The Company recorded impairment charges and reduced the carrying amount of such intangible assets to their estimated fair value of $13,000.

These intangible assets have an increased risk of future impairment due to the potential risk of failure on the execution of the Company ’ s strategy and associated impact on the assumptions utilized in developing its fair value estimate as of March 31, 2024.

Further, during the three months ended March 31, 2024, the Company, noted that two of its plant-based beverage brands:

Happy™ and Joya ® have risk of future impairment due to declining sales on account of changing consumer preference to switch from branded to private label products.

The assets are part of the International reportable segment and have a remaining aggregate carrying amount of $6,150 as of March 31, 2024.

Refer to the critical accounting policies and estimates section included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Recent Accounting Pronouncements

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

In recent years, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters.

Historically, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters.

Quantitative and Qua litative Disclosures About Market Risk

There have been no material changes from the discussion of the material factors contained in the section entitled “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on August 27, 2024.

Controls an d Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with the assistance of other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Based on this review, our CEO and CFO have concluded that the disclosure controls and procedures for the Company were effective as of September 30, 2024.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the three months ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

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What changed 10-Q

Item 2. Management’s Discussion and Analysis