Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended September 30, 2025 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Forward-looking statements in this Form 10-Q are qualified by the cautionary statement included in this Form 10-Q under the heading “Forward-Looking Statements” in the introduction of this Form 10-Q.
Overview
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 and meal preparation 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 ® Organic and Ella’s Kitchen ® baby and kid’s foods, Celestial Seasonings ® teas, Joya ® and Natumi ® plant-based beverages, The Greek Gods ® yogurt, Cully & Sully ® , Yorkshire Provender ® , New Covent Garden ® and Imagine ® soups, among others.
Strategic Review
We are focused on five actions to win in the marketplace and drive growth: aggressively streamlining our portfolio, accelerating brand renovation and innovation, implementing price increases along with broader revenue growth management, driving productivity and working capital efficiency, and enhancing our digital capabilities, inclusive of ecommerce.
During the fourth quarter of fiscal year 2025, we announced that our Board of Directors was conducting a comprehensive review of the Company’s portfolio with the assistance of our independent financial advisor. The Board is considering a broad range of strategic options to enhance value. Also, in the third quarter of fiscal year 2025, we announced that we were exploring strategic alternatives regarding our personal care business to focus on our portfolio of better-for-you food and beverages.
Restructuring Program
During the first quarter of fiscal year 2024, we initiated a multi-year growth, transformation and restructuring program (the “Restructuring 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.
Implementation of the Restructuring Program is expected to be completed by the end of the 2027 fiscal year. Cumulative pretax charges associated with the Restructuring Program are expected to be $100 million - $110 million comprised of contract termination costs, asset write-downs, employee-related costs and other transformation-related expenses. For the three months ended September 30, 2025, we incurred pretax charges of $14 million of expenses associated with the Restructuring Program, compared to $5 million in the prior year period.
As part of the Restructuring Program, the Company completed the sale of three non-core brands and our investment in a joint venture during fiscal 2024 and fiscal 2025. We also announced the exit of the Yves Veggie Cuisine ® plant-based business in Canada, which was completed in the second quarter of fiscal 2026. We initiated actions to consolidate our personal care manufacturing footprint and exit our non-strategic joint venture in India, 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; and (iii) reduce office space. Annualized pretax savings are expected to be $130 million - $150 million. The gross savings to date reflect operating model savings, productivity delivery and benefits from revenue growth management initiatives, offset by volume deleveraging and input cost inflation.
32
Table of Contents
Global Economic Environment
Inflation volatility, changing consumer behavior, and geopolitical tensions, particularly the Russia-Ukraine conflict, have driven higher supply chain costs and broader business impacts. Tariffs and potential countermeasures further contribute to industry-wide uncertainty. 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 September 30, 2025 to Three Months Ended September 30, 2024
Consolidated Results
The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended September 30, 2025 and 2024 (dollars in thousands, other than per share amounts and percentages, which may not add due to rounding):
Three Months Ended
Change in
September 30, 2025
September 30, 2024
Dollars
Percentage
Net sales
$
367,883
100.0
%
$
394,596
100.0
%
$
(26,713
)
(6.8
)%
Cost of sales
299,805
81.5
%
312,986
79.3
%
(13,181
)
(4.2
)%
Gross profit
68,078
18.5
%
81,610
20.7
%
(13,532
)
(16.6
)%
Selling, general and administrative expenses
65,512
17.8
%
71,328
18.1
%
(5,816
)
(8.2
)%
Productivity and transformation costs
8,219
2.2
%
5,018
1.3
%
3,201
63.8
%
Amortization of acquired intangible assets
1,212
0.3
%
2,180
0.6
%
(968
)
(44.4
)%
Long-lived asset impairment
—
0.0
%
31
0.0
%
(31
)
(100.0
)%
Operating (loss) income
(6,865
)
(1.9
)%
3,053
0.8
%
(9,918
)
*
Interest and other financing expense, net
15,499
4.2
%
13,746
3.5
%
1,753
12.8
%
Other (income) expense, net
(656
)
(0.2
)%
5,292
1.3
%
(5,948
)
*
Loss before income taxes and equity in net loss of equity-method investees
(21,708
)
(5.9
)%
(15,985
)
(4.1
)%
(5,723
)
35.8
%
(Benefit) provision for income taxes
(1,256
)
(0.3
)%
3,523
0.9
%
(4,779
)
*
Equity in net loss of equity-method investees
173
0.0
%
155
0.0
%
18
11.6
%
Net loss
$
(20,625
)
(5.6
)%
$
(19,663
)
(5.0
)%
$
(962
)
4.9
%
Adjusted EBITDA
$
19,732
5.4
%
$
22,375
5.7
%
$
(2,643
)
(11.8
)%
Diluted net loss per common share
$
(0.23
)
$
(0.22
)
$
(0.01
)
4.4
%
* Percentage is not meaningful due to one or more numbers being negative.
Net Sales
Net sales for the three months ended September 30, 2025 were $367.9 million, a decrease of $26.7 million, or 6.8%, including an unfavorable impact of $12.3 million, or 2.7%, related to held for sale businesses, discontinued brands and exited product categories and a favorable impact of $6.6 million, or 1.7%, 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 $21.0 million, or 5.8%, from the prior year quarter. The decrease in organic net sales comprised of a 7% decrease in volume/mix, partially offset by a 1% increase 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.
33
Table of Contents
Gross Profit
Gross profit for the three months ended September 30, 2025 was $68.1 million, a decrease of $13.5 million, or 16.6%, as compared to the prior year quarter. Gross profit margin for the three months ended September 30, 2025 was 18.5% compared with 20.7% in the prior year quarter.
The decrease in gross profit was driven primarily by the International reportable segment, mainly due to lower volume/mix and cost inflation, partially offset by productivity savings and trade efficiencies. This decline was partially offset by an increase in gross profit in the North America reportable segment, mainly driven by higher margin due to productivity savings, pricing and trade efficiencies, partially offset by lower volume/mix and cost inflation.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $65.5 million for the three months ended September 30, 2025, a decrease of $5.8 million, or 8.2%, from $71.3 million for the prior year quarter. The decrease was due to lower employee-related and non people cost discipline, as the Company began to implement overhead reduction actions.
Productivity and Transformation Costs
Productivity and transformation costs were $8.2 million for the three months ended September 30, 2025, an increase of $3.2 million, or 63.8%, from $5.0 million in the prior year quarter. The increase was primarily due to higher costs incurred in connection with the Restructuring Program.
Amortization of Acquired Intangible Assets
Amortization of acquired intangibles was $1.2 million for the three months ended September 30, 2025, a decrease of $1.0 million from $2.2 million in the prior year quarter, primarily reflecting reduced amortization expenses due to the impairment of the Personal Care tradenames (Alba Botanica ® , Avalon Organics ® , and JASON ® ) and Live Clean ® customer relationships recognized in the second quarter of fiscal 2025. See Note 9, Goodwill and Other Intangible Assets , in the Notes to the Consolidated Financial Statements included in Item 8 of the Form 10-K.
Operating (Loss) Income
Operating loss for the three months ended September 30, 2025 was $6.9 million compared to operating income of $3.1 million in the prior year quarter as a result of the items described above.
Interest and Other Financing Expense, Net
Interest and other financing expense, net totaled $15.5 million for the three months ended September 30, 2025, an increase of $1.8 million, or 12.8%, from $13.7 million in the prior year quarter. The increase resulted primarily due to higher financing fees related to the amendment of our credit agreement. See Note 10, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Other (Income) Expense, Net
Other income, net totaled $0.7 million for the three months ended September 30, 2025, compared to $5.3 million of other expense, 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 and higher net unrealized foreign currency losses in the prior year quarter.
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 September 30, 2025 was $21.7 million compared to $16.0 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.
34
Table of Contents
(Benefit) Provision for Income Taxes
The (benefit) provision for income taxes includes federal, foreign, state and local income taxes. Our income tax benefit was $1.3 million for the three months ended September 30, 2025 compared to expense of $3.5 million in the prior year quarter.
The effective income tax rate was a benefit of 5.8% and an expense of 22.0% for the three months ended September 30, 2025 and 2024, respectively. The income tax benefit for the three months ended September 30, 2025 reflected foreign tax benefit in certain jurisdictions and an increase in the valuation allowance for both federal and state income taxes. 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
Equity in net loss from our equity-method investments for each of the three months ended September 30, 2025 and September 30, 2024 was a loss of $0.2 million.
Net Loss
Net loss for the three months ended September 30, 2025, was $20.6 million, or $0.23 per diluted share, compared to $19.7 million, or $0.22 per diluted share, in the prior year quarter. The increase in net loss was attributable to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA was $19.7 million and $22.4 million for the three months ended September 30, 2025 and 2024, respectively, as a result of the factors discussed above. 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 of our net loss to Adjusted EBITDA.
35
Table of Contents
Segment Results
The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the three months ended September 30, 2025 and 2024:
(Dollars in thousands)
North
America
International
Corporate
and Other
Consolidated
Net sales
Three months ended 9/30/25
$
203,920
$
163,963
$
—
$
367,883
Three months ended 9/30/24
231,140
163,456
—
394,596
$ change
$
(27,220
)
$
507
n/a
$
(26,713
)
% change
(11.8
)%
0.3
%
n/a
(6.8
)%
Adjusted EBITDA
Three months ended 9/30/25
$
17,009
$
12,555
$
(9,832
)
$
19,732
Three months ended 9/30/24
12,459
20,370
(10,454
)
22,375
$ change
$
4,550
$
(7,815
)
$
622
$
(2,643
)
% change
36.5
%
(38.4
)%
5.9
%
(11.8
)%
Adjusted EBITDA margin
Three months ended 9/30/25
8.3
%
7.7
%
n/a
5.4
%
Three months ended 9/30/24
5.4
%
12.5
%
n/a
5.7
%
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 September 30, 2025 were $203.9 million, a decrease of $27.2 million, or 11.8%, including an unfavorable impact of $12.4 million or 4.3% related to held for sale businesses, discontinued brands and exited product categories, as compared to the prior year quarter. Organic net sales decreased $14.7 million, or 7.4%, to $185.0 million from $199.7 million in the prior year quarter.
The decrease in net sales primarily reflected lower net sales in the snacks, personal care, and meal preparation categories, partially offset by higher net sales in the beverages category. The decrease in the snacks category was due to velocity challenges and distribution losses. The decline in the meal preparation category was primarily due to the impact of discontinued brands and exited product categories, while the decline in the personal care category was driven by portfolio simplification initiatives and distribution losses.
The decrease in organic net sales was primarily due to volume softness in the snacks category, as a result of velocity challenges and distribution losses, partially offset by growth in the beverages, baby & kids and meal preparation categories.
Adjusted EBITDA for the three months ended September 30, 2025 was $17.0 million, an increase of $4.6 million, or 36.5%, from Adjusted EBITDA of $12.5 million in the prior year quarter. The increase was primarily driven by productivity savings, reduction in SG&A expenses, and pricing and trade efficiencies, partially offset by impact of lower volumes and cost inflation. Adjusted EBITDA margin was 8.3%, a 290-basis point increase from the prior year period.
36
Table of Contents
International
Our net sales in the International reportable segment for the three months ended September 30, 2025 were $164.0 million, an increase of $0.5 million, or 0.3%, including a favorable impact of $6.7 million or 4.1% related to foreign exchange, as compared to the prior year quarter. Organic net sales decreased $6.4 million or 3.9% to $156.5 million from $162.9 million the prior year quarter.
The increase in net sales was primarily due to higher sales in the meal preparation and beverages categories, substantially offset by lower sales in the baby & kids category. The decrease in organic net sales was primarily due to lower sales in the baby & kids category, partially offset by growth in the meal preparation category. The decrease in the baby & kids category was primarily driven by industry-wide volume softness in purees in the U.K.
Adjusted EBITDA for the three months ended September 30, 2025 was $12.6 million, a decrease of $7.8 million, or 38.4%, from Adjusted EBITDA of $20.4 million in the prior year quarter. The decrease was primarily driven by a decrease in gross profit associated with lower volume/mix and cost inflation, partially offset by productivity savings, pricing and trade efficiencies. Adjusted EBITDA margin was 7.7%, a 480-basis point decrease from the prior year period.
Corporate and Other
The decrease in Corporate and Other adjusted EBITDA 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.
Liquidity and Capital Resources
We finance our operations and growth primarily with the cash flows we generate from our operations and from borrowings available to us under our Credit Agreement (as defined below). We believe that our cash flows from operations and borrowing capacity under our Credit Agreement will be adequate to meet anticipated operating and other expenditures for the foreseeable future. See Note 10, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Amended and Restated Credit Agreement
On December 22, 2021, the Company entered into a Fourth Amended and Restated Credit Agreement (as subsequently amended, the “Credit Agreement”). The Credit Agreement originally provided for senior secured financing of $1,100.0 million in the aggregate, consisting of (1) $300.0 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800.0 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and was originally comprised of a $440.0 million U.S. revolving credit facility and $360.0 million global revolving credit facility) (the “Revolver”). 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. On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. 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, 5.00:1.00 until December 31, 2024, and 4.25:1.00 thereafter. See below for a description of the Third Amendment and Fourth Amendment (each as defined below). Following the Fourth Amendment, the Company’s maximum consolidated secured leverage ratio under the Credit Agreement was 5.00:1.00 until June 30, 2025 and is 5.50:1.00 for the quarter ending September 30, 2025 and thereafter. Pursuant to the Credit Agreement, the Company’s maximum consolidated leverage ratio is 6.00:1.00 and, through June 30, 2025, its minimum interest coverage ratio was 2.50:1.00.
37
Table of Contents
As of September 30, 2025, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 4.81:1.00, 4.81:1.00 and 2.92:1.00, 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 generally accepted accounting principles in the U.S. (“GAAP”). Please refer to the Credit Agreement and amendments filed as exhibits 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 or inability to refinance our indebtedness could have significant consequences” set forth in Part I, Item 1A, “Risk Factors” of our Form 10-K for the fiscal year ended June 30, 2025.
From the date of the Second Amendment until the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) the Secured Overnight Financing Rate plus a credit spread adjustment of 0.10% (“Term SOFR”) plus 2.5% per annum or (b) the Base Rate (as defined in the Credit Agreement) plus 1.5% per annum.
On May 5, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. Pursuant to the Third Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 4.75:1.00 for the quarter ending June 30, 2025 through (and including) the quarter ending March 31, 2026, 4.50:1.00 for the quarter ending June 30, 2026, and 4.25:1.00 for the quarter ending September 30, 2026 and thereafter.
Commencing on the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) Term SOFR plus 3.00% per annum or (b) the Base Rate plus 2.00% per annum.
The Third Amendment also reduced the size of the Revolver from $800.0 million to $700.0 million in the aggregate, with the U.S. revolving credit facility reduced from $440.0 million to $385.0 million and the global revolving credit facility reduced from $360.0 million to $315.0 million.
On September 11, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. Pursuant to the Fourth Amendment, (x) the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 for the quarter ending June 30, 2025 and 5.50:1.00 for the quarter ending September 30, 2025 and thereafter, (y) the Company’s minimum consolidated interest coverage ratio was amended to be 2.00:1.00 for the quarter ending September 30, 2025 and thereafter and (z) a covenant was added requiring the Company to maintain a minimum Consolidated EBITDA (as such term is defined in the Credit Agreement as amended by the Fourth Amendment) of (i) $17.0 million for the quarter ending September 30, 2025 and (ii) $52.0 million for the cumulative two quarters ending September 30, 2025 and on December 31, 2025. The aforementioned financial covenants use financial measures that are defined under the Credit Agreement and not pursuant to GAAP.
Commencing on the date of the Fourth Amendment, loans under the Credit Agreement bear interest at (a) Term SOFR plus 4.00% per annum or (b) the Base Rate plus 3.00% per annum.
The Fourth Amendment also reduced the size of the Revolver from $700.0 million to $600.0 million in the aggregate, with the U.S. revolving credit facility reduced from $385.0 million to $330.0 million and the global revolving credit facility reduced from $315.0 million to $270.0 million.
Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2025 was 7.78%. The Company uses interest rate swaps to hedge a portion of the interest rate risk related to its outstanding variable rate debt. As of September 30, 2025, the notional amount of the interest rate swaps was $400,000 with fixed rate payments of 7.12%. Including the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2025 was 7.31%. Additionally, the Credit Agreement contains a commitment fee of 0.25% per annum on the amount unused under the Credit Agreement.
As of September 30, 2025, there were $464.0 million of loans outstanding under the Revolver, $253.7 million of outstanding Term Loans, and $2.7 million of letters of credit outstanding under the Credit Agreement. As of September 30, 2025 and June 30, 2025, $133.3 million and $246.7 million, respectively, was available under the Credit Agreement, subject to compliance with the financial covenants. As of September 30, 2025, the Company was in compliance with all associated covenants.
38
Table of Contents
Cash and Cash Equivalents
Our cash and cash equivalents balance decreased by $6.5 million at September 30, 2025 to $47.9 million as compared to $54.4 million at June 30, 2025. Our working capital was $246.2 million at September 30, 2025, a decrease of $6.7 million from $252.9 million at the end of fiscal 2025. Additionally, our total debt increased by $11.4 million at September 30, 2025 to $716.2 million as compared to $704.8 million at June 30, 2025 as a result of an increase in net borrowings 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, 2025, substantially all cash was held outside the U.S.
We maintain our cash and cash equivalents primarily in money market funds or their equivalent. Accordingly, we do not believe that our investments have significant exposure to interest rate risk.
Cash (Used in) Provided by Operating, Investing and Financing Activities
Three Months Ended September 30,
Change in
(Dollars in thousands)
2025
2024
Dollars
Cash flows (used in) provided by:
Operating activities
$
(8,480
)
$
(10,787
)
$
2,307
Investing activities
(5,214
)
6,309
(11,523
)
Financing activities
9,044
(4,198
)
13,242
Effect of exchange rate changes on cash
(1,819
)
11,222
(13,041
)
Net (decrease) increase in cash and cash equivalents
$
(6,469
)
$
2,546
$
(9,015
)
Cash used in operating activities was $8.5 million for the three months ended September 30, 2025, a decrease of $2.3 million from cash used in operating activities of $10.8 million in the prior year period. This decrease in cash used in operating activities versus the prior year period resulted primarily from lower cash utilization of $5.0 million for our working capital accounts which was mainly due to focused inventory management, which generated year-over-year improvement of $13.9 million and resulted in an increased benefit from accounts payable and accrued expenses in the amount of $7.9 million, partially offset by a decrease in accounts receivable recovery of $11.8 million as well as an increase of $2.7 million in net loss adjusted for non-cash charges.
Cash used in investing activities was $5.2 million for the three months ended September 30, 2025, a change of $11.5 million from cash provided by investing activities of $6.3 million in the prior year period. The net change was primarily due to the receipt of proceeds from the sale of ParmCrisps of $12.0 million in the prior year and lower capital expenditures in the three months ended September 30, 2025 due to phasing of capital projects. See Note 5, Disposition , in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Cash provided by financing activities was $9.0 million for the three months ended September 30, 2025, a change of $13.2 million compared to cash used in financing activities of $4.2 million in the prior year period. The increase in cash used in financing activities was primarily due to higher net debt borrowings during the three months ended September 30, 2025.
Free Cash Flow
Our free cash flow was negative $13.7 million for the three months ended September 30, 2025, an improvement of $2.8 million from negative free cash flow of $16.5 million in the three months ended September 30, 2024. The period-over-period change resulted primarily from a decrease in cash flows used in operations of $2.3 million driven by the reasons explained above, and lower capital expenditures of $0.5 million. 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 used in operating activities to free cash flow.
39
Table of Contents
Share Repurchase Program
In January 2022, the Company’s Board of Directors authorized the repurchase of up to $200.0 million of the Company’s issued and outstanding common stock. 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. During the three months ended September 30, 2025, the Company did not repurchase any shares under the repurchase program. As of September 30, 2025, the Company had $173.5 million of remaining authorization under the share repurchase program.
Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures
We have included in this report measures of financial performance that are not defined by U.S. GAAP. We believe that these measures provide useful information to investors and include these measures in other communications to investors.
For each of these non-U.S. GAAP financial measures, we are providing below a reconciliation of the differences between the non-U.S. GAAP measure and the most directly comparable U.S. GAAP measure, an explanation of why our management and Board of Directors believe the non-U.S. GAAP measure provides useful information to investors and any additional purposes for which our management and Board of Directors use the non-U.S. GAAP measures. These non-U.S. GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measures.
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, held for sale businesses, discontinued brands and exited product categories, the net sales of a divested business, held for sale 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.
40
Table of Contents
A reconciliation between reported net sales and organic net sales is as follows:
(Dollars in thousands)
North
America
International
Hain
Consolidated
Net sales - Three months ended September 30, 2025
$
203,920
$
163,963
$
367,883
Less: Impact of held for sale businesses, discontinued brands and exited product categories
19,100
728
19,828
Less: Impact of foreign currency exchange
(158
)
6,718
6,560
Organic net sales - Three months ended September 30, 2025
$
184,978
$
156,517
$
341,495
Net sales - Three months ended September 30, 2024
$
231,140
$
163,456
$
394,596
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories
31,477
602
32,079
Organic net sales - Three months ended September 30, 2024
$
199,663
$
162,854
$
362,517
Net sales decline
(11.8
)%
0.3
%
(6.8
)%
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories
(4.3
)%
0.1
%
(2.7
)%
Less: Impact of foreign currency exchange
(0.1
)%
4.1
%
1.7
%
Organic net sales decline
(7.4
)%
(3.9
)%
(5.8
)%
Adjusted EBITDA
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, (gain) 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. In addition, management uses this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation. Adjusted EBITDA is a non-U.S. GAAP measure and may not be comparable to similarly titled measures reported by other companies.
We do not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP. The principal limitation of Adjusted EBITDA is that it excludes certain expenses and income that are required by U.S. GAAP to be recorded in our consolidated financial statements. In addition, Adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or included in determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with U.S. GAAP results.
41
Table of Contents
A reconciliation of net loss to Adjusted EBITDA is as follows:
Three Months Ended September 30,
(Dollars in thousands)
2025
2024
Net loss
$
(20,625
)
$
(19,663
)
Depreciation and amortization
15,411
11,427
Equity in net loss of equity-method investees
173
155
Interest expense, net
13,142
12,995
(Benefit) provision for income taxes
(1,256
)
3,523
Stock-based compensation, net
2,003
2,876
Unrealized currency losses
265
1,194
Certain litigation expenses, net (a)
827
827
Restructuring activities
Productivity and transformation costs
8,219
5,018
Plant closure related costs, net
286
376
Acquisitions, divestitures and other
Transaction and integration costs, net
2,173
(318
)
(Gain) loss on sale of assets
(886
)
3,934
Impairment charges
Long-lived asset impairment
—
31
Adjusted EBITDA
$
19,732
$
22,375
(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 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). Since capital spending is essential to maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider capital spending when evaluating our cash flows provided by or used in operating activities. We view Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider Free Cash Flow in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP.
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)
2025
2024
Net cash used in operating activities
$
(8,480
)
$
(10,787
)
Purchases of property, plant and equipment
(5,227
)
(5,757
)
Free Cash Flow
$
(13,707
)
$
(16,544
)
42
Table of Contents
Critical Accounting Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The accounting principles we use require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonableness of our critical accounting policies; however, materially different amounts may be reported under different conditions or using assumptions different from those that we have applied. 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, 2025, from which there have been no material changes. We are providing the below update regarding goodwill.
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, among others.
As of September 30, 2025, goodwill associated with the U.S. and U.K. reporting units had a carrying value of $312,321 and $114,021, respectively. The goodwill related to the U.S. and U.K. reporting units are at risk of potential impairment if the fair value of these reporting units, and their associated assets, decrease in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company’s estimates. If the Company’s ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record additional impairment charges in future periods. We monitor our reporting units at risk of impairment for interim impairment indicators.
As of September 30, 2025, 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. 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, 2025.
43
Table of Contents
Indefinite-Lived Intangible Assets
The Sensible Portions ® and Spectrum ® intangible assets are part of the North America reportable segment and have a remaining aggregate carrying value of $8,000 and $11,800, respectively, as of September 30, 2025. The Spectrum ® and Sensible Portions ® tradenames remain at risk of impairment in future periods 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.
Recent Accounting Pronouncements
Refer to Note 2, Basis of Presentation, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Seasonality
Certain of our product lines have seasonal fluctuations in demand. Hot tea and soup sales are stronger in colder months, while sales of snack foods are stronger in the warmer months. As such, our results of operations and our cash flows for any particular quarter are not indicative of the results we expect for the full year, and our historical seasonality may not be indicative of future quarterly results of operations. Historically, net sales and profitability in the first fiscal quarter have typically been the lowest of our four quarters.
Item 3. Quantitative and Qua litative Disclosures About Market Risk
There have been no significant changes in market risk from those addressed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, during the three months ended September 30, 2025. See the information set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Item 4. Controls an d Procedures
Evaluation of Disclosure Controls and Procedures
Our Interim Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with the assistance of other members of management, have performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our CEO and CFO have concluded that, as of September 30, 2025, the Company’s disclosure controls and procedures were not effective due to the material weakness identified and described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Notwithstanding the material weakness, and based on the additional analyses and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S. GAAP, our management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.
Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting
The Company is in the process of improving its policies and procedures relating to the design and operating effectiveness of controls to review on a timely basis and in sufficient detail the projected financial information and certain key assumptions and underlying calculations used in goodwill and indefinite-lived intangible asset quantitative impairment tests.
Management is taking actions to implement new or enhance existing controls and procedures to ensure proper and timely review of business activities impacting the projected financial information and certain key assumptions and underlying calculations used in preparing goodwill and indefinite-lived intangible asset quantitative impairment tests. The material weaknesses will be considered remediated when the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We anticipate that the remediation will occur by the end
44
Table of Contents
of fiscal 2026. We continue to monitor the design and operation of these remedial measures through the date of this report.
Changes in Internal Control Over Financial Reporting
Other than the actions taken under “Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting” discussed above, there were no changes in our internal controls over financial reporting that occurred during the three months ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
45
Table of Contents
PART II - OTHER INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.