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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________ 
FORM 10-Q
___________________________________________ 
(Mark One)
ý☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2017September 30, 2022

or
¨☐Transition Report pursuant to Section 13 or 15(d) of Thethe Securities Exchange Act of 1934
for the transition period from                      to                     .
Commission File No. 0-22818
___________________________________________ 
hain-20220930_g1.jpg
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
___________________________________________ 
Delaware
Delaware22-3240619
(State or other jurisdiction of
incorporation or organization)of incorporation)
(I.R.S. Employer
Identification No.)
1111 Marcus Avenue
Lake Success, New York
11042
(Address of principal executive offices)(Zip Code)

1111 Marcus Avenue, Lake Success, NY 11042
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (516) 587-5000
Former name, former address and former fiscal year, if changed since last report: N/A
___________________________________________ 


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Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareHAINThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     
Yes  ý    No  ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes  ý    No  ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☒Accelerated filer¨
Large accelerated filerýAccelerated filer¨
Non-accelerated filer
(Do not check if a smaller reporting company)
¨Smaller reporting company¨☐Emerging growth company¨☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨☐    No  ý


As of January 31, 2018,November 1, 2022, there were 103,918,02089,313,637 shares outstanding of the registrant’s Common Stock, par value $.01 per share.


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THE HAIN CELESTIAL GROUP, INC.
Index
Part I - Financial InformationPage
Part I - Financial InformationPage
Item 1.
3
4
5
6
78
89
Item 2.
2630
Item 3.
4140
Item 4.
4241
Part II - Other Information
Items 3, 4 and 45 are not applicable

Item 1.
4342
Item 1A.
4442
Item 2.
4442
Item 5.6.
4443
Item 6.
Exhibits
45
Exhibit Index
46
4744


 

1
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Forward-Looking Statements
Cautionary Note Regarding Forward Looking Information


This Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections about future events only as of the date of this Quarterly Report on Form 10-Q, and are not statements of historical fact. We make such forward-looking statements pursuant to the “safe harbor”safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Many Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of ourThe Hain Celestial Group, Inc. (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”) may differ materially from those expressed or implied by such forward-looking statements include discussions of trends and anticipated developments under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Quarterly Report on Form 10-Q. In some cases, you can identify forward-looking statements by terminology such as the use ofstatements. The words “believe,” “expect,” “anticipate,” “may,” “will,” “should,” “expects,“plan,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,“intend,” “potential,” or “continue”“will” and similar expressions or the negative of those expressions. Theseare intended to identify such forward-looking statements. Forward-looking statements include, among other things, our beliefs or expectations relating to our business strategy, growth strategy, market price, brand portfolio and productfuture performance, the seasonality of our business, our results of operations and financial condition,condition; foreign exchange and inflation rates; our Securitiesstrategic initiatives, our business strategy, our supply chain, including the availability and Exchange Commission (“SEC”) filings, enhancing internal controlspricing of raw materials, our brand portfolio, pricing actions and remediating material weaknesses. These forward-looking statements are not guarantees of ourproduct performance; current or future performancemacroeconomic trends; and involve risks,future corporate acquisitions or dispositions.

Risks and uncertainties estimates and assumptions that are difficultmay cause actual results to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement to reflect new information, the occurrence of future events or circumstances or otherwise.
The forward-looking statements in this filing do not constitute guarantees or promises of future performance. Factors that could cause or contribute to such differences may include, but are not limited to,include: challenges and uncertainty resulting from the impact of competitive products, changes to the competitive environment, changes to consumer preferences, general economic and financial market conditions, our ability to introduce new products and improve existing products, changes in relationships with customers, suppliers, strategic partners and lenders, risks associated with our international sales and operations, legal proceedings and government investigations (including any potential action by the Division of Enforcement of the SEC and securities class action and stockholder derivative litigation),competition; our ability to manage our financial reportingsupply chain effectively; input cost inflation, including with respect to freight and internal control systemsother distribution costs; foreign currency exchange risk; risks arising from the Russia-Ukraine war; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; challenges and processes,uncertainty resulting from the identificationCOVID-19 pandemic; changes to consumer preferences; customer concentration; reliance on independent distributors; the availability of material weaknesses innatural and organic ingredients; risks associated with operating internationally; risks associated with outsourcing arrangements; our internal control over financial reporting, the expected sales ofability to execute our products,cost reduction initiatives and related strategic initiatives; our ability to identify and complete acquisitions or divestitures and integrate acquisitions, changesour level of success in raw materials, commodity costs and fuel, the availabilityintegrating acquisitions; our reliance on independent certification for a number of organic and natural ingredients, risks relating to the protection of intellectual property,our products; the reputation of our brands, changesCompany and our brands; our ability to use and protect trademarks; general economic conditions; the interpretationUnited Kingdom’s exit from the European Union; cybersecurity incidents; disruptions to information technology systems; the impact of governmental regulations, unanticipated expenditures,climate change; liabilities, claims or regulatory change with respect to environmental matters; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; pending and future litigation; compliance with data privacy laws; compliance with our credit agreement; the discontinuation of LIBOR; our ability to issue preferred stock; the adequacy of our insurance coverage; impairments in the carrying value of goodwill or other intangible assets; and other risks and matters described in Part I, Item 1A of the Company’sour most recent Annual Report on Form 10-K, for the fiscal year ended June 30, 2017 under the heading “Risk Factors”this Form 10-Q and Part II, Item 1A, “Risk Factors” set forth herein, as well as in other reports that we file in the future.



We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.




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PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 2017SEPTEMBER 30, 2022 AND JUNE 30, 20172022
(In thousands, except par values)
 December 31, June 30,
 2017 2017
ASSETS(Unaudited)  
Current assets:   
Cash and cash equivalents$139,216
 $146,992
Accounts receivable, less allowance for doubtful accounts of $1,201 and $1,447, respectively
274,728
 248,436
Inventories502,372
 427,308
Prepaid expenses and other current assets62,994
 52,045
Total current assets979,310
 874,781
Property, plant and equipment, net386,077
 370,511
Goodwill1,083,696
 1,059,981
Trademarks and other intangible assets, net583,911
 573,268
Investments and joint ventures19,301
 18,998
Other assets35,042
 33,565
Total assets$3,087,337
 $2,931,104
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$263,395
 $222,136
Accrued expenses and other current liabilities112,677
 108,514
Current portion of long-term debt25,021
 9,844
Total current liabilities401,093
 340,494
Long-term debt, less current portion742,125
 740,304
Deferred income taxes98,127
 121,475
Other noncurrent liabilities23,446
 15,999
Total liabilities1,264,791
 1,218,272
Commitments and contingencies (Note 14)


 
Stockholders’ equity:   
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none—
 —
Common stock - $.01 par value, authorized 150,000 shares; issued: 108,371 and 107,989 shares, respectively; outstanding: 103,918 and 103,702 shares, respectively1,084
 1,080
Additional paid-in capital1,145,042
 1,137,724
Retained earnings935,771
 868,822
Accumulated other comprehensive loss(153,351) (195,479)
 1,928,546
 1,812,147
Less: Treasury stock, at cost, 4,453 and 4,287 shares, respectively
(106,000) (99,315)
Total stockholders’ equity1,822,546
 1,712,832
Total liabilities and stockholders’ equity$3,087,337
 $2,931,104
September 30,June 30,
20222022
ASSETS
Current assets:
Cash and cash equivalents$51,794 $65,512 
Accounts receivable, less allowance for doubtful accounts of $1,910 and $1,731, respectively
172,692 170,661 
Inventories315,882 308,034 
Prepaid expenses and other current assets53,499 54,079 
Assets held for sale1,840 1,840 
Total current assets595,707 600,126 
Property, plant and equipment, net281,540 297,405 
Goodwill912,278 933,796 
Trademarks and other intangible assets, net463,161 477,533 
Investments and joint ventures13,827 14,456 
Operating lease right-of-use assets, net115,517 114,691 
Other assets34,960 20,377 
Total assets$2,416,990 $2,458,384 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$157,916 $174,765 
Accrued expenses and other current liabilities91,906 86,833 
Current portion of long-term debt7,657 7,705 
Total current liabilities257,479 269,303 
Long-term debt, less current portion891,123 880,938 
Deferred income taxes97,813 95,044 
Operating lease liabilities, noncurrent portion109,858 107,481 
Other noncurrent liabilities19,322 22,450 
Total liabilities1,375,595 1,375,216 
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none— — 
Common stock - $.01 par value, authorized 150,000 shares; issued: 111,114 and 111,090 shares, respectively; outstanding: 89,316 and 89,302 shares, respectively
1,112 1,111 
Additional paid-in capital1,207,120 1,203,126 
Retained earnings776,021 769,098 
Accumulated other comprehensive loss(216,944)(164,482)
1,767,309 1,808,853 
Less: Treasury stock, at cost, 21,798 and 21,788 shares, respectively(725,914)(725,685)
Total stockholders’ equity1,041,395 1,083,168 
Total liabilities and stockholders’ equity$2,416,990 $2,458,384 
See notes to consolidated financial statements.

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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2017SEPTEMBER 30, 2022 AND 20162021
(In thousands, except per share amounts)
 Three Months Ended September 30,
 20222021
Net sales$439,351 $454,903 
Cost of sales345,016 349,485 
Gross profit94,335 105,418 
Selling, general and administrative expenses74,951 73,989 
Amortization of acquired intangible assets2,788 2,095 
Productivity and transformation costs773 3,983 
Proceeds from insurance claim— (196)
Operating income15,823 25,547 
Interest and other financing expense, net7,677 1,856 
Other income, net(1,790)(788)
Income from operations before income taxes and equity in net loss of equity-method investees9,936 24,479 
Provision for income taxes2,631 4,542 
Equity in net loss of equity-method investees382 526 
Net income$6,923 $19,411 
Net income per common share:
Basic$0.08 $0.20 
Diluted$0.08 $0.20 
Shares used in the calculation of net income per common share:
Basic89,307 97,121 
Diluted89,493 97,438 
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Net sales$775,204
 $739,999
 $1,483,480
 $1,421,463
Cost of sales630,933
 601,606
 1,207,606
 1,173,203
Gross profit144,271
 138,393
 275,874
 248,260
Selling, general and administrative expenses90,372
 85,187
 181,093
 170,154
Amortization of acquired intangibles4,909
 4,693
 9,820
 9,421
Acquisition related expenses, restructuring and integration charges4,797
 108
 10,643
 568
Accounting review and remediation costs, net of insurance proceeds4,451
 7,005
 3,093
 12,966
Long-lived asset impairment3,449
 —
 3,449
 —
Operating income36,293
 41,400
 67,776
 55,151
Interest and other financing expense, net6,513
 5,097
 12,828
 10,178
Other (income)/expense, net(760) (1,353) (3,897) (1,865)
Income before income taxes and equity in net income of equity-method investees30,540
 37,656
 58,845
 46,838
(Benefit)/provision for income taxes(16,369) 10,509
 (7,899) 11,271
Equity in net income of equity-method investees(194) (38) (205) (222)
Net income$47,103
 $27,185
 $66,949
 $35,789
        
Net income per common share:       
Basic$0.45
 $0.26
 $0.65
 $0.35
Diluted$0.45
 $0.26
 $0.64
 $0.34
        
Shares used in the calculation of net income per common share:       
Basic103,837
 103,597
 103,773
 103,532
Diluted104,440
 104,204
 104,379
 104,225

See notes to consolidated financial statements.



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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2017SEPTEMBER 30, 2022 AND 20162021
(In thousands)

 Three Months Ended
 December 31, 2017 December 31, 2016
 
Pre-tax
amount
 Tax (expense) benefit After-tax amount 
Pre-tax
amount
 Tax benefit After-tax amount
Net income    $47,103
     $27,185
            
Other comprehensive income (loss):           
Foreign currency translation adjustments$8,336
 $—
 8,336
 $(51,222) $—
 (51,222)
Change in deferred gains (losses) on cash flow hedging instruments—
 —
 —
 (13) 3
 (10)
Change in unrealized gain (loss) on available for sale investment8
 (3) 5
 (32) 13
 (19)
Total other comprehensive income (loss)$8,344
 $(3) $8,341
 $(51,267) $16
 $(51,251)
            
Total comprehensive income (loss)    $55,444
     $(24,066)
            
            
 Six Months Ended
 December 31, 2017 December 31, 2016
 
Pre-tax
amount
 Tax (expense) benefit After-tax amount 
Pre-tax
amount
 Tax benefit After-tax amount
Net income    $66,949
     $35,789
            
Other comprehensive income (loss):           
Foreign currency translation adjustments$42,197
 $—
 42,197
 $(82,958) $—
 (82,958)
Change in deferred gains (losses) on cash flow hedging instruments(82) 15
 (67) (443) 38
 (405)
Change in unrealized gain (loss) on available for sale investment(2) —
 (2) (89) 30
 (59)
Total other comprehensive income (loss)$42,113
 $15
 $42,128
 $(83,490) $68
 $(83,422)
            
Total comprehensive income (loss)    $109,077
     $(47,633)
            
 Three Months Ended
September 30, 2022September 30, 2021
 
Pre-tax
amount
Tax (expense) benefitAfter-tax amount
Pre-tax
amount
Tax (expense) benefitAfter-tax amount
Net income$6,923 $19,411 
Other comprehensive loss:
Foreign currency translation adjustments before reclassifications(67,149)— (67,149)(22,805)— (22,805)
Change in deferred gains on cash flow hedging instruments14,231 (3,638)10,593 44 (9)35 
Change in deferred losses on fair value hedging instruments(272)69 (203)— — — 
Change in deferred gains on net investment hedging instruments5,773 (1,476)4,297 2,287 (480)1,807 
Total other comprehensive loss$(47,417)$(5,045)$(52,462)$(20,474)$(489)$(20,963)
Total comprehensive loss$(45,539)$(1,552)
See notes to consolidated financial statements.



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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE SIXTHREE MONTHS ENDED DECEMBER 31, 2017SEPTEMBER 30, 2022
(In thousands, except par values)

 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Sharesat $.01CapitalEarningsSharesAmountLossTotal
Balance at June 30, 2022111,090 $1,111 $1,203,126 $769,098 21,788 $(725,685)$(164,482)$1,083,168 
Net income6,923 6,923 
Other comprehensive loss(52,462)(52,462)
Issuance of common stock pursuant to stock-based compensation plans24 1 1 
Employee shares withheld for taxes10 (229)(229)
Stock-based compensation expense3,994 3,994 
Balance at September 30, 2022111,114 $1,112 $1,207,120 $776,021 21,798 $(725,914)$(216,944)$1,041,395 
 Common Stock Additional       
Accumulated
Other
  
   Amount Paid-in Retained Treasury Stock Comprehensive  
 Shares at $.01 Capital Earnings Shares Amount Income (Loss) Total
Balance at June 30, 2017107,989
 $1,080
 $1,137,724
 $868,822
 4,287
 $(99,315) $(195,479) $1,712,832
Net income
 
 
 66,949
 
 
 
 66,949
Other comprehensive income (loss)
 
 
 
 
 
 42,128
 42,128
Issuance of common stock pursuant to stock-based compensation plans382
 4
 (4) 
 
 
 
 —
Shares withheld for payment of employee payroll taxes due on shares issued under stock-based compensation plans
 
 
 
 166
 (6,685) 
 (6,685)
Stock-based compensation expense
 
 7,322
 
 
 
 
 7,322
Balance at December 31, 2017108,371
 $1,084
 $1,145,042
 $935,771
 4,453
 $(106,000) $(153,351) $1,822,546

See notes to consolidated financial statements.


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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Sharesat $.01CapitalEarningsSharesAmountIncome (Loss)Total
Balance at June 30, 2021109,507 $1,096 $1,187,530 $691,225 10,438 $(283,957)$(73,011)$1,522,883 
Net income19,411 19,411 
Other comprehensive loss(20,963)(20,963)
Issuance of common stock pursuant to stock-based compensation plans61 — — — 
Employee shares withheld for taxes29 (1,175)(1,175)
Repurchase of common stock4,525 (175,687)(175,687)
Stock-based compensation expense4,287 4,287 
Balance at September 30, 2021109,568 $1,096 $1,191,817 $710,636 14,992 $(460,819)$(93,974)$1,348,756 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIXTHREE MONTHS ENDED DECEMBER 31, 2017SEPTEMBER 30, 2022 AND 20162021
(In thousands)
 Three Months Ended September 30,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$6,923 $19,411 
Adjustments to reconcile net income from operations to net cash (used in) provided by operating activities:
Depreciation and amortization11,970 10,855 
Deferred income taxes(1,497)(2,105)
Equity in net loss of equity-method investees382 526 
Stock-based compensation, net3,994 4,287 
Gain on sale of assets(60)(276)
Other non-cash items, net(1,457)(1,093)
(Decrease) increase in cash attributable to changes in operating assets and liabilities:
Accounts receivable(9,589)(9,443)
Inventories(16,907)2,277 
Other current assets2,541 900 
Other assets and liabilities1,348 (1,566)
Accounts payable and accrued expenses(2,764)13,813 
Net cash (used in) provided by operating activities(5,116)37,586 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(7,215)(17,810)
Investments and joint ventures, net191 (408)
Proceeds from sale of assets96 164 
Net cash used in investing activities(6,928)(18,054)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under bank revolving credit facility80,000 120,000 
Repayments under bank revolving credit facility(69,875)(5,000)
Payments of other debt, net(72)(237)
Share repurchases— (177,103)
Employee shares withheld for taxes(229)(1,175)
Net cash provided by (used in) financing activities9,824 (63,515)
Effect of exchange rate changes on cash(11,498)(2,926)
Net decrease in cash and cash equivalents(13,718)(46,909)
Cash and cash equivalents at beginning of period65,512 75,871 
Cash and cash equivalents at end of period$51,794 $28,962 
 Six Months Ended December 31,
 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$66,949
 $35,789
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization34,972
 34,168
Deferred income taxes(28,808) (5,300)
Equity in net income of equity-method investees(205) (222)
Stock based compensation7,322
 5,235
Impairment of long-lived assets3,449
 —
Other non-cash items, net(1,716) 130
Increase (decrease) in cash attributable to changes in operating assets and liabilities, net of amounts applicable to acquisitions:   
Accounts receivable(19,194) 15,885
Inventories(65,431) (31,921)
Other current assets(4,521) 20,854
Other assets and liabilities4,636
 (1,038)
Accounts payable and accrued expenses27,973
 42,547
Net cash provided by operating activities25,426
 116,127
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Acquisitions of businesses, net of cash acquired(13,064) —
Purchases of property and equipment(31,027) (28,725)
Proceeds from sale of business—
 5,419
Other—
 1,000
Net cash used in investing activities(44,091) (22,306)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Borrowings under bank revolving credit facility35,000
 22,000
Repayments under bank revolving credit facility(35,000) (56,500)
Borrowings (repayments) of other debt, net13,809
 (13,690)
Acquisition related contingent consideration—
 (2,498)
Shares withheld for payment of employee payroll taxes(6,685) (7,934)
Net cash provided by (used in) financing activities7,124
 (58,622)
    
Effect of exchange rate changes on cash3,765
 (6,000)
    
Net (decrease) increase in cash and cash equivalents(7,776) 29,199
Cash and cash equivalents at beginning of period146,992
 127,926
Cash and cash equivalents at end of period$139,216
 $157,125

See notes to consolidated financial statements.

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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands, except par values and per share data)


1.    BUSINESS


The Hain Celestial Group, Inc., a Delaware corporation (collectively along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” andor “our”), was founded in 1993 and is headquartered in Lake Success, New York. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet — To Create and Inspire A Healthier Way of LifeTM andtenet. The Company continues to be thea leading marketer, manufacturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass marketmass-market and e-commerce retailers, food service channels and club, drug, and convenience stores in over 8075 countries worldwide. The Company operates under two reportable segments: North America and International.


With a proven track recordAcquisition
On December 28, 2021, the Company acquired all outstanding stock of strategic growthProven Brands, Inc. (and its subsidiary That's How We Roll LLC) and profitability, the Company manufactures, markets, distributes and sells organic and natural products under brand names that are soldKTB Foods Inc., collectively doing business as “better-for-you” products, providing consumers with the opportunity to lead A Healthier Way of LifeTM.  Hain Celestial is a leader in many organic and natural products categories, with many recognized brands in the various market categories it serves, including Almond Dream®, Arrowhead Mills®, Bearitos®, Better BeanTM, BluePrint®, Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth’s Best®, Ella’s Kitchen®, Empire®, Europe’s Best®, Farmhouse Fare®, Frank Cooper’s®, FreeBird®, Gale’s®, Garden of Eatin’®, GG UniqueFiberTM, Hain Pure Foods®, Hartley’s®, Health Valley®, Imagine®, Johnson’s Juice Co.®, Joya®, Kosher Valley®, Lima®, Linda McCartney’s® (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Plainville Farms®, Rice Dream®, Robertson’s®, Rudi’s Gluten-Free Bakery®, Rudi’s Organic Bakery®, Sensible Portions®, Spectrum Organics®, Soy Dream®, Sun-Pat®, SunSpire®, Terra®, The Greek Gods®, Tilda®, Walnut Acres®, WestSoy®, Yorkshire ProvenderTM and Yves Veggie Cuisine®.  The Company’s personal care products are marketed under the Alba Botanica®, Avalon Organics®, Earth’s Best®, JASON®, Live Clean® and Queen Helene® brands. 

Changes in Segments

Effective July 1, 2017, due to changes to the Company’s internal management and reporting structure, the United Kingdom operations of the Ella’s Kitchen® brand (“Ella’s Kitchen UK”"That's How We Roll" ("THWR"), which was previously included within the United States reportable segment, was moved to the United Kingdom reportable segment.producer and marketer of ParmCrisps® and Thinsters®. See Note 15, SegmentInformation, 4, Acquisition, for additional information on the Company’s operating and reportable segments.details.


2.    BASIS OF PRESENTATION


The Company’s unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliated companies in which the Company exerts significant influence, but which it does not control, are accounted for under the equity method of accounting. As such, consolidated net income includes the Company's equity in the current earnings or losses of such companies.

The Company's unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP.GAAP and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 20172022 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the three and six months ended December 31, 2017September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018.2023. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 20172022 and for the fiscal year then ended included in the Company’s Annual Report on Form 10-K for the period ended June 30, 2017 (the “Form 10-K”) for information not included in these condensed notes.


All amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousand, except par values and per share amounts, unless otherwise indicated.


Newly AdoptedSignificant Accounting PronouncementsPolicies


In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718):Improvements to EmployeeShare-Based Payment Accounting. This ASU, among other things, changes the treatment of share-based payment transactions by recognizing the impact of excess tax benefits or deficiencies related to exercised or vested awardsThe Company's significant accounting policies are described in income tax expense in the period of exercise or vesting, instead of additional paid in capital. The updated guidance is effective for fiscal years beginning after December 15, 2016 and interim periods within those annual periods. The Company adopted this new guidance effective July 1, 2017. As a result of this adoption:


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As required, we prospectively recognized discrete tax benefits of $237 and $836, respectively, in the income tax line item of our consolidated income statement for the three and six months ended December 31, 2017 related to excess tax benefits upon vesting or settlement in that period.
We elected to adopt the cash flow presentation of the excess tax benefits retrospectively. As a result, we decreased our cash used in financing activities by $3,314 for the six months ended December 31, 2016.
We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation costs to be recognized in each period.
We have not changed our policy on statutory withholding requirements and will continue to allow an employee to withhold at the minimum statutory withholding requirements. Amounts paid by us to taxing authorities when directly withholding shares associated with employees’ income tax withholding obligations are classified as a financing activity in our cash flow statement.
We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the three and six months ended December 31, 2017.
We did not have any material excess tax benefits previously recognized in additional paid-in capital; therefore, it was not necessary to record a deferred tax asset for the unrecognized tax benefits with an adjustment to opening retained earnings.

Recently Issued Accounting Pronouncements Not Yet Effective

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 revises accounting for operating leases by a lessee, among other changes, and requires a lessee to recognize a liability to make lease payments and an asset representing its right to use the underlying asset for the lease term in the balance sheet. The standard is effective for the first interim and annual periods beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are still evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. We are currently assessing the impact the new standard will have on our Consolidated Financial Statements, which will consist primarily of a balance sheet gross up of our operating leases to show equal and offsetting lease assets and lease liabilities.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers, providing a single five-step model to be applied to all revenue transactions. The guidance also requires improved disclosures to assist users of the financial statements to better understand the nature, amount, timing and uncertainty of revenue that is recognized. Subsequent to the issuance of ASU 2014-09, the FASB has issued various additional ASUs clarifying and amending this new revenue guidance. The guidance is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that period, and we will adopt the new guidance in fiscal 2019. Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We are currently performing a diagnostic review of our arrangements with customers across our significant businesses, including our practices of offering rebates, refunds, discounts, and other price allowances, and trade and consumer promotion programs. We are evaluating our methods of estimating the amount and timing of these various forms of variable consideration. We are continuing to evaluate the impact the new guidance will have on our consolidated financial statements, but we currently expect to adopt ASU 2014-09 using the modified retrospective option.

Refer to Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements as of June 30, 2017 and for the fiscal year then ended included in the Form 10-K10-K. Included herein are certain updates to those policies.

Transfer of Financial Assets

The Company accounts for a detailed discussion on additional recently issued accounting pronouncements not yet adopted bytransfers of financial assets, such as non-recourse accounts receivable financing arrangements, when the Company. ThereCompany has been no changesurrendered control over the related assets. Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. The Company has non-recourse financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash. The Company transferred accounts receivable in their entirety to the statements made in the Form 10-K asbuyers and satisfied all of the dateconditions to report the transfer of filingfinancial assets in their entirety as a sale. The principal amount of this Form 10-Q.receivables sold under these arrangements was $83,659 and $22,889 during the three months ended September 30, 2022 and 2021,


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respectively. The incremental cost of financing receivables under these arrangements is included in selling, general and administrative expenses on the Company’s Consolidated Statements of Operations. The proceeds from the sale of receivables are included in cash used in operating activities on the Consolidated Statements of Cash Flows.

3.    EARNINGS PER SHARE



The following table sets forth the computation of basic and diluted earningsnet income per share:
 Three Months Ended December 31, Six Months Ended December 31,
 2017
2016 2017 2016
Numerator:       
Net income$47,103
 $27,185
 $66,949
 $35,789
        
Denominator:       
Basic weighted average shares outstanding103,837
 103,597
 103,773
 103,532
Effect of dilutive stock options, unvested restricted stock and unvested restricted share units603
 607
 606
 693
Diluted weighted average shares outstanding104,440
 104,204
 104,379
 104,225
        
Net income per common share:       
Basic$0.45
 $0.26
 $0.65
 $0.35
Diluted$0.45
 $0.26
 $0.64
 $0.34

Basicshare utilized to calculate earnings per share excludeson the dilutive effectsConsolidated Statements of stock options, unvested restricted stock and unvested restricted share units. Diluted earnings per share includes the dilutive effects of common stock equivalents such as stock options and unvested restricted stock awards.Operations:
 Three Months Ended September 30,
 20222021
Numerator:
Net income$6,923 $19,411 
Denominator:
Basic weighted average shares outstanding89,307 97,121 
Effect of dilutive stock options, unvested restricted stock and unvested restricted share units186 317 
Diluted weighted average shares outstanding89,493 97,438 

There were 567489 and 275 stock-basednil restricted stock awards excluded from our calculation of diluted earningsnet income per share calculationsshare for the three and six months ended December 31, 2017September 30, 2022 and 2016,2021, respectively, as such awards were anti-dilutive.

Additionally, 298 and 1,299 stock-based awards outstanding at September 30, 2022 and 2021, respectively, were excluded from the calculation of diluted net income per share for the three months endedSeptember 30, 2022 and 2021, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods. Additionally, 27 restricted stock awards were excluded from our diluted earnings per share calculation for the three and six months ended December 31, 2016 as such awards were antidilutive. Restricted stock awards excluded from our diluted earnings per share calculation for the three and six months ended December 31, 2017 were de minimis.


Share Repurchase Program


On June 21, 2017,In January 2022, the Company's Board of Directors authorized the repurchase of up to $250,000$200,000 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 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, includingconsiderations. During the Company’s historical strategy of pursuing accretive acquisitions.three months ended September 30, 2022, the Company did not repurchase any shares under the repurchase program. As of December 31, 2017,September 30, 2022, the Company had not repurchased any shares under this program and had $250,000$173,514 of remaining capacityauthorization under the share repurchase program.

4.    ACQUISITIONS

The Company accounts for acquisitions in accordance with ASC 805, Business Combinations. The results of operations of the acquisitions have been included in the consolidated results from their respective dates of acquisition. The purchase price of each acquisition is allocated to the tangible assets, liabilities and identifiable intangible assets acquired based on their estimated fair values. Acquisitions may include contingent consideration, the fair value of which is estimated on the acquisition date as the present value of the expected contingent payments, determined using weighted probabilities of possible payments. The fair values assigned to identifiable intangible assets acquired were determined primarily by using an income approach which was based on assumptions and estimates made by management. Significant assumptions utilized in the income approach were based on company-specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The excess of the purchase price over the fair value of the identified assets and liabilities has been recorded as goodwill.

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The costs related to all acquisitions have been expensed as incurred and are included in “Acquisition related expenses, restructuring and integration charges” in the Consolidated Statements of Income. Acquisition related costs of $215 and $329 were expensed in the three and six months ended December 31, 2017, respectively. Acquisition related costs of $253 were expensed in the six months ended December 31, 2016. The Company did not incur any acquisition-related costs in During the three months ended December 31, 2016. The expenses incurred primarily related to professional fees and other transaction-related costs associated with our recent acquisitions.September 30, 2021, the Company repurchased 4,525 shares under the repurchase program for a total of $175,597, excluding commissions, at an average price of $38.80 per share. Repurchases made during the three months ended September 30, 2021, were made under a previous Board of Directors authorization.


Fiscal 2018

4.     ACQUISITION

That's How We Roll

On December 1, 2017,28, 2021, the Company acquired Clarks UK Limited, (“Clarks”)all outstanding stock of THWR, the producer and marketer of ParmCrisps® and Thinsters®, a leading maple syrup and natural sweetener brand,deepening the Company's position in the United Kingdom. Clarks produces natural sweeteners under the ClarksTM brand, including maple syrup, honey and carob, date and agave syrups, which are sold in leading retailers and used by food service and industrial customers in the United Kingdom.snacking category. Consideration for the transaction consisted of cash, net of cash acquired, totaling £9,698 (approximately $13,064 at$260,424. Of the transaction date exchange rate). Additionally, contingenttotal consideration, $259,985 was paid with the remaining $439 payable as of up toSeptember 30, 2022. The acquisition was funded with borrowings under the Credit Agreement (as defined in Note 9, Debt and Borrowings).

Results of THWR are included in the United States operating segment, a maximum of £1,500 is payable based on the achievement of specified operating results over the 18-month period following completioncomponent of the acquisition. Clarks is included in our United Kingdom operatingNorth America reportable segment. NetTHWR's net sales and income before income taxes attributable to the Clarks acquisition included in our consolidated results represented less than 1%were 3.6% of our consolidated results.net sales for the three months ended September 30, 2022.


Fiscal 2017The following table provides unaudited pro forma results of operations had the acquisition been completed at the beginning of fiscal 2022. The pro forma information reflects certain adjustments related to the acquisition but does not reflect any potential operating efficiencies or cost savings that may result from the acquisition. Accordingly, this information has been provided for illustrative

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On June 19, 2017,purposes only and does not purport to be indicative of the actual results that would have been achieved by the Company acquired Sonmundo, Inc. d/b/a The Better Bean Company (“Better Bean”), which offers prepared beans and bean-based dips sold in refrigerated tubs under the Better BeanTM brand. Consideration for the transaction consisted of cash, net of cash acquired, totaling $3,434. Additionally, contingent consideration of upperiods presented or that will be achieved by the combined company in the future. The pro forma information has been adjusted to a maximum of $4,000 is payable based on the achievement of specified operating results over the three-year period following the closing date. Better Bean is included in our Cultivate operating segment, which is part of Rest of World. Net sales and income before income taxesgive effect to items that are directly attributable to the Better Beantransactions and are expected to have a continuing impact on the combined results.
Unaudited supplemental pro forma information
 Three Months Ended
 September 30, 2022September 30, 2021
Net sales$439,351 $485,196 
Net income from operations$6,923 $19,425 
Diluted net income per common share from operations$0.08 $0.20 
The Company's acquisition includedis described in our consolidated results represented less than 1% of our consolidated results.

On April 28, 2017, the Company acquired The Yorkshire Provender Limited (“Yorkshire Provender”), a producer of premium branded soups basedmore detail in North YorkshireNote 4, Acquisitions andDispositions, in the United Kingdom. Yorkshire Provender supplies leading retailers, on-the-go food outlets and food service providersNotes to the Consolidated Financial Statements in the United Kingdom. Consideration for the transaction consisted of cash, net of cash acquired, totaling £12,465 (approximately $16,110 at the transaction date exchange rate)Form 10-K.

5.    Additionally, contingent consideration of up to a maximum of £1,500 is payable based on the achievement of specified operating results at the end of the three-year period following the closing date. Yorkshire Provender is included in our United Kingdom operating and reportable segment. Net sales and income before income taxes attributable to Yorkshire Provender included in our consolidated results represented less than 1% of our consolidated results.INVENTORIES

5.    INVENTORIES


Inventories consisted of the following:
September 30,
2022		June 30,
2022
Finished goods$189,757 $202,544 
Raw materials, work-in-progress, and packaging126,125 105,490 
$315,882 $308,034 
 December 31,
2017		 June 30,
2017
Finished goods$295,927
 $264,148
Raw materials, work-in-progress and packaging206,445
 163,160
 $502,372
 $427,308


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6.    PROPERTY, PLANT AND EQUIPMENT, NET


Property, plant and equipment, net consisted of the following:
September 30,
2022		June 30,
2022
Land$10,697 $11,216 
Buildings and improvements47,370 51,849 
Machinery and equipment285,941 296,398 
Computer hardware and software62,682 65,680 
Furniture and fixtures20,176 23,522 
Leasehold improvements52,521 54,999 
Construction in progress32,780 27,200 
512,167 530,864 
Less: Accumulated depreciation and impairment230,627 233,459 
$281,540 $297,405 
 December 31,
2017		 June 30,
2017
Land$34,713
 $33,930
Buildings and improvements113,672
 116,723
Machinery and equipment367,366
 350,689
Computer hardware and software53,302
 51,486
Furniture and fixtures18,067
 15,993
Leasehold improvements30,290
 29,296
Construction in progress32,059
 16,119
 649,469
 614,236
Less: Accumulated depreciation and amortization263,392
 243,725
 $386,077
 $370,511


Depreciation and amortization expense for the three months ended December 31, 2017September 30, 2022 and 20162021 was $10,043$8,067 and $9,888, respectively. Such expense for the six months ended December 31, 2017 and 2016 was $20,338 and $20,116,$7,408, respectively.


In the second quarter of fiscal 2018, the Company determined that it was more likely than not that certain fixed assets at one of its manufacturing facilitiesA facility in the United States would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to utilize third-party manufacturers. As such, the Company recorded a $3,449 non-cash impairment charge related to the closure of the facility and included $4,851 as assetswas held for sale within “Prepaidas of September 30, 2022 with a net carrying amount of $1,840.

7.    LEASES
The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Europe. The Company determines if an arrangement is or contains a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company’s lease agreements generally do not contain residual value guarantees or material restrictive covenants.
Some of the Company’s leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index changes are recorded as variable lease expense in the period incurred. The Company does not have any related party leases, and sublease transactions are de minimis.

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The components of lease expenses for the three months ended September 30, 2022 and other current assets”, in its December 31, 2017 Consolidated Balance Sheet.2021 were as follows:



Three Months Ended
September 30, 2022September 30, 2021
Operating lease expenses$4,975 $3,752 
Finance lease expenses69 70 
Variable lease expenses180 403 
Short-term lease expenses496 1,365 
Total lease expenses$5,720 $5,590 

7.Supplemental balance sheet information related to leases was as follows:
LeasesClassificationSeptember 30, 2022June 30, 2022
Assets
Operating lease ROU assets, netOperating lease right-of-use assets, net$115,517 $114,691 
Finance lease ROU assets, netProperty, plant and equipment, net387413 
Total leased assets$115,904 $115,104 
Liabilities
Current
OperatingAccrued expenses and other current liabilities$12,566 $13,154 
FinanceCurrent portion of long-term debt124 149 
Non-current
OperatingOperating lease liabilities, noncurrent portion109,858 107,481 
FinanceLong-term debt, less current portion277 278 
Total lease liabilities$122,825 $121,062 

Additional information related to leases is as follows:
Three Months Ended
September 30, 2022September 30, 2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,968 $3,745 
Operating cash flows from finance leases$4 $5 
Financing cash flows from finance leases$52 $60 
ROU assets obtained in exchange for lease obligations:
Operating leases$7,143 $319 
Finance leases$26 $— 
Weighted average remaining lease term:
Operating leases10.2 years9.6 years
Finance leases4.1 years4.1 years
Weighted average discount rate:
Operating leases4.5 %3.3 %
Finance leases4.3 %4.2 %

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Maturities of lease liabilities as of September 30, 2022 were as follows:
Fiscal YearOperating leasesFinance leasesTotal
2023 (remainder of year)$12,533 $115 $12,648 
202417,229 90 17,319 
202515,378 89 15,467 
202614,893 68 14,961 
202714,738 53 14,791 
Thereafter82,318 25 82,343 
Total lease payments157,089 440 157,529 
Less: Imputed interest34,665 39 34,704 
Total lease liabilities$122,424 $401 $122,825 


8.    GOODWILL AND OTHER INTANGIBLE ASSETS


Goodwill


The following table showsprovides the changes in the carrying amountvalue of goodwill by businessreportable segment:
North AmericaInternationalTotal
Balance as of June 30, 2022$695,715 $238,081 $933,796 
  Translation and other adjustments, net3,468 (24,986)(21,518)
Balance as of September 30, 2022$699,183 $213,095 $912,278 
 United States United Kingdom Hain Pure Protein Rest of World Total
Balance as of June 30, 2017 (a)$591,416
 $329,135
 $41,089
 $98,341
 $1,059,981
  Acquisition activity—
 6,936
 —
 —
 6,936
  Reallocation of goodwill between reporting units (b)(35,519) 35,519
 —
 —
 —
  Translation and other adjustments, net134
 13,567
 —
 3,078
 16,779
Balance as of December 31, 2017 (a)$556,031
 $385,157
 $41,089
 $101,419
 $1,083,696

(a) The total carrying value of goodwill is reflected net of $126,577 of accumulated impairment charges, of which $97,358 related to the Company’s United Kingdom operating segment and $29,219 related to the Company’s Europe operating segment.

(b) Effective July 1, 2017, due to changes to the Company’s internal management and reporting structure, the United Kingdom operations of the Ella’s Kitchen® brand, which was previously included within the United States reportable segment, was moved to the United Kingdom reportable segment. Goodwill totaling $35,519 was reallocated to the United Kingdom reportable segment in connection with this change. See Note 1, Business, and Note 15, Segment Information, for additional information on the Company’s operating and reportable segments.

The Company performs its annual test for goodwill and indefinite lived intangible asset impairment as of the first day of the fourth quarter of its fiscal year. In addition, if and when events or circumstances change that would more likely than not reduce the fair value of any of its reporting units or indefinite-life intangible assets below their carrying value, an interim test is performed.


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The change in operating segments as described above was deemed a triggering event, resulting in the Company performing an interim goodwill impairment analysis on the reporting units impacted by this segment change as of immediately before and immediately after the change. There were no impairment indicators resulting from this analysis which was performed in the first quarter of fiscal 2018.

Other than as described above, there were no events or circumstances that warranted an interim impairment test for goodwill during the three months ended September 30, 2022 or indefinite lived2021.

Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
September 30,
2022		June 30,
2022
Non-amortized intangible assets:
Trademarks and tradenames$366,368 $379,466 
Amortized intangible assets:
Other intangibles195,165 199,448 
Less: Accumulated amortization(98,372)(101,381)
Net amortized intangible assets96,793 98,067 
Net other intangible assets$463,161 $477,533 

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the sixthree months ended December 31, 2017.September 30, 2022 or 2021.

Other Intangible Assets

The following table sets forth balance sheet information for intangible assets, excluding goodwill, subject to amortization and intangible assets not subject to amortization:
 December 31,
2017		 June 30,
2017
Non-amortized intangible assets:   
Trademarks and tradenames (a)$436,106
 $424,817
Amortized intangible assets:   
Other intangibles259,343
 247,712
Less: accumulated amortization(111,538) (99,261)
Net carrying amount$583,911
 $573,268

(a) The gross carrying value of trademarks and tradenames is reflected net of $60,202 of accumulated impairment charges.


Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships, trademarks and tradenames and are amortized over their estimated useful lives of 37 to 25 years. Amortization expense included in continuing operationsthe Consolidated Statements of Operations was as follows:
Three Months Ended September 30,
 20222021
Amortization of acquired intangibles$2,788 $2,095 

Expected amortization expense over the next five fiscal years is as follows:
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 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Amortization of acquired intangibles$4,909
 $4,693
 $9,820
 $9,421


Fiscal Year Ending June 30,
2023 (remainder of year)2024202520262027
Estimated amortization expense$8,108 $8,679 $7,812 $7,416 $7,319 

8.The weighted average remaining amortization period of amortized intangible assets is 14.2 years.

9.    DEBT AND BORROWINGS


Debt and borrowings consisted of the following:
September 30,
2022		June 30,
2022
Revolving credit facility$605,000 $593,000 
Term loans294,375 296,250 
Less: Unamortized issuance costs(1,043)(1,105)
Other borrowings(1)
448 498 
898,780 888,643 
Short-term borrowings and current portion of long-term debt(2)
7,657 7,705 
Long-term debt, less current portion$891,123 $880,938 
 December 31,
2017		 June 30,
2017
Credit Agreement borrowings payable to banks$735,088
 $733,715
Tilda short-term borrowing arrangements19,094
 7,761
Other borrowings12,964
 8,672
 767,146
 750,148
Short-term borrowings and current portion of long-term debt25,021
 9,844
Long-term debt, less current portion$742,125
 $740,304


(1) Includes $401 (June 30, 2022: $427) of finance lease obligations as discussed in Note 7, Leases.
(2) Includes $124 (June 30, 2022: $149) of short-term finance lease obligations as discussed in Note 7, Leases.

Amended and Restated Credit Agreement


On December 12, 2014,22, 2021, the Company enteredrefinanced its revolving credit facility by entering into the Seconda Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) which provides for a $1,000,000 unsecured revolving credit facility which may be increased by an additional uncommitted $350,000, provided certain conditions are met. The Credit Agreement expires in December 2019. Borrowings under the Credit Agreement may be used to provide working capital, finance capital expenditures and permitted acquisitions, refinance certain existing indebtedness and for other lawful corporate purposes.. The Credit Agreement provides for multicurrency borrowings in Euros, Pounds Sterling and Canadian Dollars as well as other currencies which may be designated. In addition, certain wholly-owned foreign subsidiariessenior secured financing of the Company may be designated as co-borrowers. The Credit Agreement contains restrictive covenants, which are usual and customary for facilities of its type, and include, with specified exceptions, limitations on the Company’s ability to engage in certain business activities, incur debt, have liens, make capital expenditures, pay dividends or make other distributions, enter into affiliate transactions, consolidate, merge or acquire or dispose of assets, and make certain

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investments, acquisitions and loans. The Credit Agreement also requires the Company to satisfy certain financial covenants, such as maintaining a consolidated interest coverage ratio (as defined$1,100,000 in the Credit Agreement)aggregate, consisting of no less than 4.0 to 1.0(1) $300,000 in aggregate principal amount of term loans (the "Term Loans") and (2) an $800,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and is comprised of a consolidated leverage ratio (as defined in$440,000 U.S. revolving credit facility and $360,000 global revolving credit facility) (the "Revolver"). Both the Credit Agreement)Revolver and the Term Loans mature on December 22, 2026. As of no more than 3.5 to 1.0. The consolidated leverage ratio is subject to a step-up to 4.0 to 1.0 for the four full fiscal quarters following an acquisition. ObligationsSeptember 30, 2022, there were $605,000 of loans under the Credit Agreement are guaranteed by certain existingRevolver, $294,375 of Term Loans, and future domestic subsidiaries of the Company. As of December 31, 2017, there were $735,088 of borrowings and $8,976$6,769 letters of credit outstanding under the Credit Agreement and $255,936 available, and the Company was in compliance with all associated covenants.Agreement.


The Credit Agreement provides that loans will bear interest at rates based on (a) the EurocurrencyEurodollar Rate as defined in the Credit Agreement, plus a rate ranging from 0.875% to 1.70%1.75% per annum;annum or (b) the Base Rate as defined in the Credit Agreement, plus a rate ranging from 0.00% to 0.70%0.75% per annum, the relevant rate being the Applicable Rate. The Applicable Rate will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement. Swing line loansLine Loans and Global Swing Line loansLoans denominated in U.S, dollarsU.S. Dollars will bear interest at the Base Rate plus the Applicable Rate, and Global Swing Line loansLoans denominated in foreign currencies shall bear interest based on (a) the overnight EurocurrencyEuro Short Term Rate, foror €STR, in the case of such loans denominated in Euros plus the Applicable Rate, (b) the Sterling Overnight Index Average Reference Rate, or SONIA, in the case of such currencyloans denominated in Sterling plus the Applicable Rate or (c) the Canadian Prime Rate plus the Applicable Rate. The weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2017September 30, 2022 was 3.00%4.38%. Additionally, the Credit Agreement contains a Commitment Fee as defined in the Credit Agreement, on the amount unused under the Credit Agreement ranging from 0.20%0.15% to 0.30%0.25% per annum. Suchannum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid, as set forthgrid.

The Credit Agreement includes financial covenants that require compliance with a consolidated interest coverage ratio, a consolidated secured leverage ratio and a consolidated leverage ratio. The minimum consolidated interest coverage ratio is 2.75:1.00. The maximum consolidated secured leverage ratio was 5.00:1.00 through the fiscal quarter ended September 30, 2022; will be 4.50:1.00 for the fiscal quarters ending December 31, 2022 and March 31, 2023; and will be 4.25:1.00 thereafter commencing with the fiscal quarter ending June 30, 2023. The maximum consolidated leverage ratio is 6.00:1.00. As of September 30, 2022, $188,231 was available under the Credit Agreement, subject to compliance with the financial covenants. As of September 30, 2022, the Company was in compliance with all associated covenants.

In connection with the Credit Agreement, the Company and its material domestic subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”), pursuant to which all of the obligations under the Credit Agreement will
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be secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interests in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions.

Credit Agreement Issuance Costs

Based on the Company's evaluation of the borrowing capacity associated with the creditors participating in the previous facility compared to those in the Credit Agreement.

Amended Credit Agreement,

On February 6, 2018, $1,762 of the $2,036 of unamortized deferred financing costs at December 22, 2021 were deferred and the remaining $274 were expensed as a component of Interest and other financing expense, net on our Consolidated Statement of Operations. Additionally, the Company entered intoincurred debt issuance costs of approximately $2,764 in connection with the Third AmendedCredit Agreement. Of the total $4,526 of deferred debt issuance costs, $3,292 were associated with the Revolver and Restated Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement provides forare being amortized on a straight-line basis within Other assets on our Consolidated Balance Sheet, and $1,234 are being amortized on a straight-line basis, which approximates the extensioneffective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net on our existing $1,000,000 unsecured revolving credit facility through February 6, 2023 and provides for an additional $300,000Consolidated Statement of Operations over the term loan. Underof the Amended Credit Agreement, the credit facility may be increased by an additional uncommitted $400,000, provided certain conditions are met. The financial covenants, interest rates, and general terms and conditions of both the unsecured revolving credit facility and term loan under the Amended Credit Agreement are substantially the same as our existing Credit Agreement.


The term loan is payable on the last dayMaturities of each fiscal quarter commencing Juneall debt instruments at September 30, 2018 in an amount equal to $3,750 and can be prepaid in whole or in part without premium or penalty.2022, are as follows:


Tilda Short-Term Borrowing Arrangements
Due in Fiscal YearAmount
Remainder of 2023$5,597 
20247,544 
20257,253 
20267,253 
2027871,133 
Total debt and borrowings$898,780 


Tilda maintains short-term borrowing arrangements primarily used to fund the purchase of rice from India and other countries. The maximum borrowings permitted under all such arrangements are £52,000. Outstanding borrowings are collateralized by the current assets of Tilda, typically have six-month terms and bear interest at variable rates typically based on LIBOR plus a margin (weighted average interest rate of approximately 3.20% at December 31, 2017).

Other Borrowings

Other borrowings primarily relate to a cash pool facility in Europe and an uncommited revolving credit facility in India.

The cash pool facility provides our Europe operating segment with sufficient liquidity to support the Company’s growth objectives within this segment. The maximum borrowings permitted under the cash pool arrangement are €12,500. Outstanding borrowings bear interest at variable rates typically based on EURIBOR plus a margin of 1.10% (weighted average interest rate of approximately 1.10% at December 31, 2017).

During the three months ended December 31, 2017, our Tilda Hain Indian subsidiary entered into an uncommitted revolving credit facility to fund its working capital needs. The maximum borrowings permitted under the arrangement are $4,000. There were no amounts outstanding at December 31, 2017.




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9.10.    INCOME TAXES


TheIn general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability inon the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.


The effective income tax rate was (53.6)%an expense of 26.5% and 27.9%18.6% for the three months ended December 31, 2017September 30, 2022 and 2016, respectively, and (13.4)% and 24.1% for the six months ended December 31, 2017 and 2016,2021, respectively. The effective income tax rate for the three and six months ended December 31, 2017 was primarily impacted by the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. The Act significantly revised the U.S. corporate income tax regime by lowering the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, repealing the deduction for domestic production activities, imposing additional limitations on the deductibility of executive officers’ compensation, implementing a territorial tax system and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. The Act provides for numerous significant tax law changes with varying effective dates. As a fiscal year-end taxpayer, certain provisions of the Act impacted the Company in our second quarter ended December 31, 2017, while other provisions will impact the Company beginning in fiscal 2019.

As the Company has a JuneSeptember 30, fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. federal statutory rate of approximately 28.1% for fiscal 2018 and a 21% U.S. federal statutory rate for subsequent fiscal years. The three and six months ended December 31, 2017 included the impact of a $29,266 reduction to the value of the Company’s net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated $5,211 transition tax imposed on the deemed repatriation of deferred foreign income.

ASC 740 requires recording the effects of tax law changes in the period enacted as discrete items. However, the SEC issued Staff Accounting Bulletin No. 118 which permits filers to record provisional amounts during a measurement period ending no later than one year from the date of the Act’s enactment. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the Act; however, the Company has made a reasonable estimate of the effects on the existing deferred balances as well as the computation of the one-time transition tax. The final transition impacts of the Act may materially differ from the Company’s estimates. Both the tax benefit and the tax charge represent provisional amounts and are subject to change2022 increased due to further interpretations of the Act, legislative actiontax expense related to address questions that arise because of the Act, any changes in accounting standards for income taxes or related interpretations in response to the Act and/or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including historical records, changes to current year earnings estimatesstock-based compensation and foreign exchange rates of foreign subsidiaries as well as the Company’s ongoing analysis of the Act. No additional income taxes have been provided for distributing remaining undistributed foreign earnings or any additional outside basis differences inherent in the entities, as these amounts continue to be indefinitely reinvested in foreign operations. However, we do intend to further study changes enacted by the Act, costs of repatriation and the current and future cash needs of foreign operations to determine whether there is an opportunity to repatriate foreign cash balances in the future on a tax-efficient basis.

uncertain tax positions. The effective income tax rate for the three and six months ended December 31, 2016 was favorable as comparedSeptember 30, 2021
decreased due to the statutory rate as a resultreversal of uncertain tax position accruals based on filing and approval of certain elections by taxing authorities. The effective income tax rates in each period were also impacted by the geographical mix of earnings and was also impacted by a reduction in the statutory tax rate in the United Kingdom enacted in the first quarter of fiscal 2017. Such reduction resulted in a decrease to the carrying value of net deferred tax liabilities of $2,086, which favorably impacted the effective tax rate.state income taxes.




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10.11.     ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)LOSS


The following tables presenttable presents the changes in accumulated other comprehensive income (loss)loss (AOCL):
Three Months Ended September 30,
20222021
Foreign currency translation adjustments:
Other comprehensive loss before reclassifications$(67,149)$(22,805)
Deferred gains on cash flow hedging instruments:
Amount of gain recognized in AOCL on derivatives (1)
11,360 535 
Amount of gain reclassified from AOCL into income (1)
(767)(500)
Deferred gains on fair value hedging instruments:
Amount of gain recognized in AOCL on derivatives (1)
1,145 — 
Amount of gain reclassified from AOCL into income (1)
(1,348)— 
Deferred gains on net investment hedging instruments:
Amount of gain recognized in AOCL on derivatives (1)
4,666 1,910 
Amount of gain reclassified from AOCL into income (1)
(369)(103)
Net change in AOCL$(52,462)$(20,963)

(1)See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains (losses) on cash flow and net investment hedging instruments recorded in the Consolidated Statements of Operations in the three months ended September 30, 2022 and 2021.

 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Foreign currency translation adjustments:       
Other comprehensive income (loss) before reclassifications (1)
$8,336
 $(51,222) $42,197
 $(82,958)
Deferred gains/(losses) on cash flow hedging instruments:
       
Other comprehensive income before reclassifications—
 45
 39
 101
Amounts reclassified into income (2)
—
 (55) (106) (506)
Unrealized gain/(loss) on available for sale investment:       
Other comprehensive loss before reclassifications5
 (19) (2) (69)
Amounts reclassified into income (3)
—
 —
 —
 10
Net change in accumulated other comprehensive income (loss)$8,341
 $(51,251) $42,128
 $(83,422)

(1)
Foreign currency translation adjustments included intra-entity foreign currency transactions that were of a long-term investment nature and were a gain of $315and a loss of $12,908 for the three months ended December 31, 2017and 2016,respectively, and a gain of $1,066 and a loss of $20,061 for the six months ended December 31, 2017 and 2016, respectively.
(2)Amounts reclassified into income for deferred gains/(losses) on cash flow hedging instruments are recorded in “Cost of sales” in the Consolidated Statements of Income and, before taxes, were $530 for the three months ended December 31, 2016 and $132 and $1,150 for the six months ended December 31, 2017 and 2016, respectively. There were no amounts reclassified into income for deferred gains/(losses) on cash flow hedging instruments for the three months ended December 31, 2017.
(3)Amounts reclassified into income for losses on sale of available for sale investments were based on the average cost of the shares held (See Note 12, Investments and Joint Ventures). Such amounts are recorded in “Other (income)/expense, net” in the Consolidated Statements of Income and were $16 before taxes for the six months ended December 31, 2016. There were no amounts reclassified into income for losses on sale of available for sale investments for the three and six months ended December 31, 2017.


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11.12.    STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS


The Company has twoa stockholder-approved plans,plan, the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan and the 2000 Directors Stock Plan,(the "2002 Plan"), under which the Company’s officers, senior management, other key employees, consultants, and directors may be granted optionsequity-based awards. The Company also grants shares under its 2019 Equity Inducement Award Program (the "2019 Inducement Program") to purchaseinduce selected individuals to become employees of the Company’s common stockCompany. The 2002 Plan and 2019 Inducement Program are collectively referred to as the "Stock Award Plans." In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program” or other forms of equity-based awards."LTIP") that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods. The Company's plans are described in Note 13, Stock-Based Compensation and Incentive Performance Plans, in the Notes to the Consolidated Financial Statements in the Form 10-K.


Compensation cost and related income tax benefits recognized in the Consolidated Statements of IncomeOperations for stock-based compensation plans were as follows:
  Three Months Ended September 30,
 20222021
Selling, general and administrative expense$3,994 $4,287 
Related income tax benefit$402 $273 
  
Three Months Ended December 31, Six Months Ended December 31,
 2017
2016 2017 2016
Compensation cost (included in selling, general and administrative expense)$4,158

$2,531
 $7,322

$5,235
Related income tax benefit$1,187
 $949
 $2,421
 $1,963

Stock Options

A summary of the stock option activity for the six months ended December 31, 2017 is as follows:
17
 Number of Options 
Weighted
Average
Exercise
Price
 
Weighted
Average
Contractual
Life (years)
 
Aggregate
Intrinsic Value
Options outstanding and exercisable at June 30, 2017122
 $2.26
    
Exercised—
 $—
    
Options outstanding and exercisable at December 31, 2017122
 $2.26
 13.5 $4,893

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 Six Months Ended December 31,
 2017
2016
Intrinsic value of options exercised—
 6,507
Tax benefit recognized from stock option exercises—
 2,538

At December 31, 2017, there was no unrecognized compensation expense related to stock option awards.

Restricted Stock


Awards of restricted stock are either restricted stock awards ("RSAs") or restricted stock units ("RSUs") that are issued at no cost to the recipient. Performance-based or market-based RSUs are issued in the form of performance share units ("PSUs"). A summary of the restricted stock activity (including all RSAs, RSUs and restricted share unit activityPSUs) for the sixthree months ended December 31, 2017September 30, 2022 is as follows:
Number of Shares
and Units		Weighted
Average Grant
Date Fair 
Value (per share)
Non-vested RSAs, RSUs and PSUs outstanding at June 30, 2022790 $42.44 
Granted924 $21.48 
Vested(24)$36.15 
Forfeited(54)$40.76 
Non-vested RSAs, RSUs and PSUs outstanding at September 30, 20221,636 $30.73 
 
Number of Shares
and Units
 
Weighted
Average Grant
Date Fair 
Value (per share)
Non-vested restricted stock, restricted share units, and performance units at June 30, 2017992
 $27.59
Granted431
 $33.85
Vested(382) $36.96
Forfeited(14) $29.59
Non-vested restricted stock, restricted share units, and performance units at December 31, 20171,027
 $26.71


 Six Months Ended December 31,
 2017 2016
Fair value of restricted stock and restricted share units granted$14,595
 $—
Fair value of shares vested$14,238
 $9,004
Tax benefit recognized from restricted shares vesting$4,887
 $3,464


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On July 3, 2012,365 shares granted during the Company entered into a Restricted Stock Agreement (the “Agreement”) with Irwin D. Simon,three months ended September 30, 2022 that represent the Company’s Chairman, President and Chief Executive Officer. The Agreement provides for a granttarget number of 800 shares of restricted stock (the “Shares”), the vesting of which is both market and time-based. The market condition is satisfied in increments of 200 Shares upon the Company’s common stock achieving four share price targets. On the last day of any forty-five consecutive trading day period during which the average closing price of the Company’s common stockthat may be earned based on the Nasdaq Global Select Market equals or exceeds the following prices: $31.25, $36.25, $41.25 and $50.00, respectively, the market condition for each increment of 200 Shares will be satisfied. Thepre-defined market conditions were requiredthat are eligible to be satisfied priorvest ranging from zero to June200% of target. All such shares relate to the 2023 – 2025 LTIP as further described below. Vested shares during the three months ended September 30, 2017. Once each market condition has been satisfied,2022 include a tranchetotal of 200 Shares will vest in equal amounts annually over5 shares related to certain performance-based metrics being met and a five-year period. Except intotal of 19 shares related to service-based RSUs. There are market-based PSU awards outstanding under both the case of a change of control, termination without cause, death or disability (each as defined in Mr. Simon’s Employment Agreement), the unvested Shares are subject to forfeiture unless Mr. Simon remains employed through the applicable market conditions and time vesting periods. The grant date fair value for each tranche was separately estimated based on a Monte Carlo simulation that calculated the likelihood of goal attainment2023 – 2025 LTIP and the time frame most likely for goal attainment. 2022 – 2024 LTIP. At September 30, 2022, 365 of such shares were outstanding under the 2023 – 2025 LTIP while 158 shares were outstanding under the 2022 – 2024 LTIP.

The total grant date fair value of RSAs, RSUs and PSUs granted and of shares vested, and the Sharestax benefit recognized from restricted shares vesting was estimatedas follows:
Three Months Ended September 30,
20222021
Fair value of RSAs, RSUs and PSUs granted$19,839 $478 
Fair value of shares vested$576 $2,522 
Tax benefit recognized from restricted shares vesting$78 $246 

At September 30, 2022, there was $37,613 of unrecognized stock-based compensation expense related to be $16,151,non-vested restricted stock awards which wasis expected to be recognized over a weighted-averageweighted average period of approximately 4.02.08 years. On

2023-2025 LTIP

During the three months ended September 28, 2012, August 27, 2013, December 13, 2013 and October 22, 2014,30, 2022, the four respective market conditions were satisfied. As such,Company granted market-based PSU awards under the four tranchesLTI Program with a total target payout of 200 Shares each are expected365 shares of common stock. Vesting is pursuant to vest in equal amountsa defined calculation of either relative TSR or absolute TSR (as defined) over the five-year period commencing onfrom September 6, 2022 through the first anniversaryearlier of (i) September 6, 2025; (ii) the date the market condition forparticipant’s employment is terminated due to death or Disability (as defined); or (iii) the respective tranche was satisfied.

At December 31, 2017, $18,620 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards, inclusive of the Shares, was expected to be recognized over a weighted-average period of approximately 1.9 years.

Long-Term Incentive Plan

The Company maintains a long-term incentive program (the “LTI Plan”). The LTI Plan currently consistseffective date of a two-year performance-based long-term incentive planChange in Control (as defined) (the “2015-2016 LTIP”“TSR Performance Period”) and two performance-based long-term incentive plans (the “2016-2018 LTIP” and the “2017-2019 LTIP”) that provide for performance equity awards that can be earned over the respective three-year performance period. Participants in the LTI Plan include the Company’s executive officers, including the Chief Executive Officer, and certain other key executives.

The Compensation Committee administers the LTI Plan and is responsible for, among other items, selecting the specific performance measures for awards and setting the target performance required to receive an award after the completion. Vesting of the performance period. The Compensation Committee determines the specific payout to the participants. Such awards may be paid in cash and/or unrestricted245 target shares of the Company’s common stock at the discretion of the Compensation Committee, provided that any such stock-basedoutstanding PSU awards shall be issuedis pursuant to and be subject to the terms and conditions of the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan, as in effect and as amended from time-to-time.

Upon the adoption of the 2015-2016 LTIP, the Compensation Committee granted an initial award to each participant in the form of equity-based instruments (restricted stock or restricted share units), for a portion of the individual target awards (the “Initial Equity Grants”). These Initial Equity Grants were subject to the achievement of minimum performance goals and vested on a pro rata basis over the three-year period. The 2015-2016 LTIP awards contain an additional year of time-based vesting. The Initial Equity Grants were expensed over the vesting period of three years on a straight-line basis through November 2017.

Upon adoption of the 2016-2018 LTIP and 2017-2019 LTIP, the Compensation Committee granted performance units to each participant, the achievement of which is dependent upon a defined calculation of relative total shareholder returnTSR over the periodTSR Performance Period (the “Relative TSR PSUs”). Vesting of 120 target shares of the outstanding PSU awards is pursuant to the achievement of pre-established three-year compound annual TSR targets over the TSR Performance Period (the “Absolute TSR PSUs”). Total shares eligible to vest for both the Relative TSR PSUs and Absolute TSR PSUs range from July 1, 2015zero to June 30, 2018 and from July 1, 2017 to June 30, 2019 (the “TSR Grant”), respectively. The200% of the target amount. Grant date fair values are calculated using a Monte-Carlo simulation model with grant date fair value for these awards was separately estimated based on a Monte Carlo simulation that calculated the likelihood of goal attainment. Each performance unit translates into one unit of common stock. The TSR grant represents half of each participant’svalues per target award. The other half of the 2016-2018 LTIPshare and 2017-2019 LTIP is based on the Company’s achievement of specified net sales growth targets over the respective three-year period, if the targets are achieved, the award in connection with the 2016-2018 LTIP may be paid in cash and/or unrestricted shares of the Company’s common stock at the discretion of the Compensation Committee, while the award in connection with the 2017-2019 LTIP may be paid only in unrestricted shares of the Company’s common stock.related valuation assumptions as follows:


The Company recorded a net benefit (in addition to the stock-based compensation expense associated with the Initial Equity Grants and the TSR Grant) of $21 and net expense of $525 for the three and six months ended December 31, 2017, respectively, due to the Company’s current estimates of achievement under the plans. The Company recorded expense of $1,128 and $2,255 for the three and six months ended December 31, 2016, respectively, related to the LTI Plan.


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Absolute TSR PSUsRelative TSR PSUs
Grant date fair value (per target share)$20.18 $27.47 
Risk-free interest rate3.54 %3.54 %
Expected dividend yield——
Expected volatility40.30 %26.60 %
Expected term3.00 years3.00 years
12.
13.    INVESTMENTS AND JOINT VENTURES


Equity method investments

In October 2009, the Company formed a joint venture, Hutchison Hain Organic Holdings Limited (“HHO”), with Hutchison China Meditech Ltd. (“Chi-Med”), a majority-owned subsidiary of CK Hutchison Holdings Limited, to market and distribute certain of the Company’s brands in Hong Kong, China and other surrounding markets. Voting control of the joint venture is shared equally between the Company and Chi-Med, although, in the event of a deadlock, Chi-Med has the ability to cast the deciding vote, and therefore, the investment is being accounted for under the equity method of accounting. At December 31, 2017 and June 30, 2017, the carrying value of the Company’s 50.0% investment in, and advances to, HHO were $2,407 and $1,629, respectively, and are included in the Consolidated Balance Sheet as a component of “Investments and joint ventures.”

On October 27, 2015, the Company acquired a 14.9%minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Founders Table Restaurant Group, LLC (“Chop’t”Founders Table”). Chop’t developsFounders Tableowns and operates the fast-casual fresh salad restaurants in the Northeastrestaurant chains Chop't Creative Salad Co. and Mid-Atlantic United States. Chop’t markets and sells certain of the Company’s branded products and provides consumer insight and feedback.Dos Toros Taqueria. The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors. During the three months ended December 31, 2017, the Company’s ownership interest was reduced to 14.3% due to the distributionDirectors of additional ownership interests. Further ownership interest distributions could potentially dilute the Company’s ownership interest to as low as 11.9%.Founders Table. At December 31, 2017September 30, 2022 and June 30, 2017,2022, the carrying value of the Company’s investment in Chop’tFounders Table was $16,014$8,910 and $16,487,$9,491, respectively, and is included in the Consolidated Balance Sheets as a component of “InvestmentsInvestments and joint ventures.”


Available-For-Sale Securities

The Company hasalso holds an investment in Hutchison Hain Organic Holdings Limited, a less than 1% equity ownership interest in Yeo Hiap Sengjoint venture with HUTCHMED (China) Limited, (“YHS”), a Singapore-based natural food and beverage company listed on the Singapore Exchange, which is accounted for as an available-for-sale security. under the equity method of accounting. The shares held at December 31, 2017 totaled 933. The faircarrying value of these shares held was $880 (cost basisthe investments were $4,917 and $4,965 as of $1,164) at December 31, 2017September 30, 2022 and $882 (cost basis of $1,164) at June 30, 20172022, respectively, and is included in “Investments and joint ventures,” with the related unrealized gain or loss, net of tax, included in “Accumulated other comprehensive loss” in the Consolidated Balance Sheet. The Company concluded that the decline in its YHS investment below its cost basis is temporarySheets as a component of Investments and accordingly, has not recognized a loss in the Consolidated Statements of Operations. In making this determination, the Company considered its intent and ability to hold the investment until the cost is recovered, the financial condition and near-term prospects of YHS, the magnitude of the loss compared to the investment’s cost and publicly available information about the industry and geographic region in which YHS operates.joint ventures.



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13.14.    FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE


The Company’s financial assets and liabilities measured at fair value are required to be grouped in one of three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:


•Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
•Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
•Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).


The following table presents by level within the fair value hierarchy assets and liabilities measured at fair value on a recurring basis as of December 31, 2017:September 30, 2022: 
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$25,596 $— $25,596 $— 
Equity investment277 277 — — 
Total$25,873 $277 $25,596 $— 
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 Total 
Quoted
prices in
active
markets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Assets:       
Cash equivalents$20,813
 $20,813
 $—
 $—
Forward foreign currency contracts39
 —
 39
 —
Available for sale securities880
 880
 —
 —
Total$21,732
 $21,693
 $39
 $—
Liabilities:       
Forward foreign currency contracts$216
 $—
 $216
 $—
Contingent consideration, non-current4,559
 —
 —
 4,559
Total$4,775
 $—
 $216
 $4,559


The following table presents by level within the fair value hierarchy assets and liabilities measured at fair value on a recurring basis as of June 30, 2017:2022:
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$7,476 $— $7,476 $— 
Equity investment560 560 — — 
Total$8,036 $560 $7,476 $— 
Liabilities:
Derivative financial instruments$3,184 $— $3,184 $— 
Total$3,184 $— $3,184 $— 
 Total 
Quoted
prices in
active
markets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Assets:       
Cash equivalents$21,800
 $21,800
 $—
 $—
Forward foreign currency contracts99
 —
 99
 —
Available for sale securities882
 882
 —
 —
Total$22,781
 $22,682
 $99
 $—
Liabilities:       
Forward foreign currency contracts$53
 $—
 $53
 $—
Contingent consideration, non-current2,656
 —
 —
 2,656
Total$2,709
 $—
 $53
 $2,656

Available for sale securities consist of the Company’s investment in YHS (see Note 12, Investments and Joint Ventures).  Fair value is measured using the market approach based on quoted prices.  The Company utilizes the income approach to measure fair value for its foreign currency forward contracts.  The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices.





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The Company estimates the original fair value of the contingent consideration as the present value of the expected contingent payments, determined using the weighted probabilities of the possible payments. The Company reassesses the fair value of contingent payments on a periodic basis. Although the Company believes its estimates and assumptions are reasonable, different assumptions, including those regarding the operating results of the respective businesses, or changes in the future may result in different estimated amounts.

The following table summarizes the Level 3 activity for the six months ended December 31, 2017.
Balance as of June 30, 2017$2,656
Fair value of initial contingent consideration(a)

1,547
Contingent consideration adjustment (b)
325
Translation adjustment31
Balance as of December 31, 2017$4,559

(a) In connection with the acquisition of Clarks during fiscal 2018, payment of a portion of the purchase price is contingent upon the achievement of certain operating results. Contingent consideration of up to a maximum of £1,500 is payable based on the achievement of specified operating results over the 18-month period following completion of the acquisition.

(b) The change in the fair value of contingent consideration is included in “Acquisition related expenses, restructuring and integration charges” in the Company’s Consolidated Statements of Income.


There were no transfers of financial instruments between the three levels of fair value hierarchy during the sixthree months ended December 31, 2017September 30, 2022 or December 31, 2016.2021.

The carrying amount of cash and cash equivalents, accounts receivable, net, accounts payable and certain accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these financial instruments. The Company’s debt approximates fair value due to the debt bearing fluctuating market interest rates (See Note 8, Debt and Borrowings).


Derivative Instruments


The Company uses interest rate swaps to manage its interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency exchange rates. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the derivatives held as of September 30, 2022 and June 30, 2022 were classified as Level 2 of the fair value hierarchy.

15.    DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily hasby managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The
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Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S. Dollar.

Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three months ended September 30, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the remaining nine months of fiscal 2023, the Company estimates that an additional $5,150 will be reclassified as a decrease to interest expense.

As of September 30, 2022, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate DerivativeNumber of InstrumentsNotional Amount
Interest rate swap8$630,000

Cash Flow Hedges of Foreign Exchange Risk

The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. Dollar. The Company uses foreign currency derivatives including cross-currency swaps to manage its exposure to fluctuations in the USD-EUR exchange rates. Cross-currency swaps involve exchanging fixed-rate interest payments for fixed-rate interest receipts, both of which will occur at the USD-EUR forward exchange rates in effect upon entering into the instrument. The Company, at times, also uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates. The Company designates these derivatives as cash flow hedges of foreign exchange risk.

For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the remaining nine months of fiscal 2023, the Company estimates that an additional $161 relating to the cross-currency swaps will be reclassified as an increase to interest expense.

As of September 30, 2022, the Company had no outstanding foreign currency derivatives that were used to hedge its foreign exchange risk.

Net Investment Hedges

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. Dollars for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency- fixed-rate payments over the life of the agreement.

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For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in accumulated other comprehensive loss as part of the cumulative translation adjustment. Amounts are reclassified out of accumulated other comprehensive loss into earnings when the hedged net investment is either sold or substantially liquidated.

As of September 30, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:

Foreign Currency DerivativeNumber of InstrumentsNotional SoldNotional Purchased
Cross-currency swap4€100,300$105,804

Fair Value Hedges

The Company is exposed to changes in the fair value of certain of its foreign denominated intercompany loans due to changes in foreign exchange spot rates. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in foreign currency exchange rates relating to certain anticipated cash flowsaffecting gains and firm commitmentslosses on intercompany loan principal and interest. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from its international operations. Thea counterparty in exchange for the Company may enter into certain derivative financial instruments, when available on a cost-effective basis, to manage such risk. Derivative financial instruments are not used for speculative purposes. The fair valuemaking foreign-currency-fixed-rate payments over the life of thesethe agreement.

For derivatives is included in prepaid expensesdesignated and other current assets and accrued expenses and other current liabilities in the Consolidated Balance Sheet. For derivative instruments that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in unrealized exchange gains/losses.

Gains and losses on the derivative representing hedge components excluded from the assessment of probable forecasted cash flows,effectiveness are recognized over the effective portionlife of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction. During the remaining nine months of fiscal 2023, the Company estimates that an additional $359 relating to cross currency swaps will be reclassified as a decrease to interest expense.

As of September 30, 2022, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value is temporarily reported in accumulated other comprehensive incomeattributable to foreign exchange risk:

Foreign Currency DerivativeNumber of InstrumentsNotional SoldNotional Purchased
Cross-currency swap1€24,700$26,021

As of September 30, 2022 and recognized in earnings whenJune 30, 2022, the hedged item affects earnings. Fairfollowing amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges and derivative instruments not designated as hedges are marked-to-market each reporting period with any unrealized gains or losses recognized in earnings.hedges:


Derivative instruments designated at inception as hedges are measured for effectiveness at
Carrying Amount of the Hedged Asset
Cumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset
September 30,
2022		June 30,
2022		September 30,
2022		June 30,
2022
Intercompany loan receivable$24,211 $25,899 $1,688 $122 

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Designated Hedges

The following table presents the inceptionfair value of the hedge andCompany’s derivative financial instruments as well as their classification on a quarterly basis. These assessments determine whether derivatives designatedthe Consolidated Balance Sheet as qualifying hedges continue to be highly effective in offsetting changes inof September 30, 2022:

Asset DerivativesLiability Derivatives
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate swapsPrepaid expenses and other current assets$15,161 Accrued expenses and other current liabilities / Other noncurrent liabilities$— 
Cross-currency swapsPrepaid expenses and other current assets10,435 Other noncurrent liabilities— 
Total derivatives designated as hedging instruments$25,596 $— 


The following table presents the cash flows of hedged items. Any ineffective portion of change in fair value is not deferred in accumulated other comprehensive income and is included in current period results. of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of June 30, 2022:

Asset DerivativesLiability Derivatives
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate swapsPrepaid expenses and other current assets$4,230 Accrued expenses and other current liabilities / Other noncurrent liabilities$3,184 
Cross-currency swapsPrepaid expenses and other current assets3,246 Other noncurrent liabilities— 
Total derivatives designated as hedging instruments$7,476 $3,184 

The Company will discontinuefollowing table presents the pre-tax effect of cash flow hedge accounting when the forecasted transaction is no longer probable of occurring on the originally forecasted date or when the hedge is no longer effective. There were no discontinued foreign exchange hedgesAOCL for the three and six months ended December 31, 2017September 30, 2022 and December 31, 2016.2021:


There were no cash flow hedges outstanding as of December 31, 2017. The notional and fair value amounts of cash flow hedges at June 30, 2017 were $1,828 and $84 of net assets, respectively. The notional and fair value amounts of derivatives designated as fair value hedges at December 31, 2017 were $4,500 and $94 of net liabilities, respectively. There were no fair value hedges outstanding as of June 30, 2017.
Derivatives in Cash Flow Hedging RelationshipsAmount of Gain (Loss) Recognized in AOCL on DerivativesLocation of Gain (Loss) Reclassified from AOCL into Income (Expense)Amount of Gain (Loss) Reclassified from AOCL into Income (Expense)
Three Months Ended September 30,Three Months Ended September 30,
2022202120222021
Interest rate swaps$15,262 $(117)Interest and other financing expense, net$1,146 $(104)
Cross-currency swaps— 776 Interest and other financing expense, net / Other (income) expense, net(115)738 
Foreign currency forward contracts— 19 Cost of sales— — 
Total$15,262 $678 $1,031 $634 
The notional and fair value amounts of derivatives not designated as hedges at December 31, 2017 were $17,903 and $83 of net liabilities, respectively. There were $6,114 of notional amount and $38 of net liabilities of derivatives not designated as hedges as of June 30, 2017.



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Gains and losses related to both designated and non-designated foreign currency exchange contracts are recorded inThe following table presents the pre-tax effect of the Company’s derivative financial instruments electing cash flow hedge accounting on the Consolidated Statements of Operations based upon the nature of the underlying hedged transaction and were not material for the three and six months ended December 31, 2017of September 30, 2022 and December 31, 2016.2021:



Location and Amount of Gain (Loss) Recognized in the Consolidated Statements of Operations on Cash Flow Hedging Relationships
Three Months Ended September 30, 2022Three Months Ended September 30, 2021
Cost of salesInterest and other financing expense, netOther expense/income, netCost of salesInterest and other financing expense, netOther expense/income, net
The effects of cash flow hedging:
Gain (Loss) on cash flow hedging relationships
Interest rate swaps
Amount of gain (loss) reclassified from AOCL into income$— $1,146 $— $— $(104)$— 
Cross-currency swaps
Amount of (loss) gain reclassified from AOCL into income$— $(115)$— $— $41 $697 

The following table presents the pre-tax effect of fair value hedge accounting on AOCL for the three months ended September 30, 2022 and 2021:

Derivatives in Fair value Hedging RelationshipsAmount of Gain Recognized in AOCL on DerivativesLocation of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)
Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)
Three Months Ended September 30,Three Months Ended September 30,
2022202120222021
Cross-currency swaps$1,539 $— Interest and other financing expense, net$123 $— 
Total$1,539 $— $123 $— 


The following table presents the pre-tax effect of the Company’s derivative financial instruments electing fair value hedge accounting on the Consolidated Statements of Operations as of September 30, 2022 and 2021:

Location and Amount of Gain Recognized in the Consolidated Statements of Operations on Fair Value Hedging Relationships
Three Months Ended September 30, 2022Three Months Ended September 30, 2021
Cost of salesInterest and other financing expense, netOther expense (income), netCost of salesInterest and other financing expense, netOther expense (income), net
The effects of fair value hedging:
Gain on fair value hedging relationships
Cross-currency swaps
Amount of gain reclassified from AOCL into income$— $123 $1,688 $— $— $— 
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The following table presents the pre-tax effect of the Company’s net investment hedges on AOCL and the Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021:
14.
Derivatives in Net Investment Hedging RelationshipsAmount of Gain Recognized in AOCL on DerivativesLocation of (Loss) Gain Recognized in Income (Expense) on DerivativesAmount of (Loss) Gain Recognized in Income (Expense) on Derivatives
Three Months Ended September 30,Three Months Ended September 30,
2022202120222021
Cross-currency swaps$6,268 $2,417 Interest and other financing expense, net$(495)$130 

Credit-Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision providing that upon certain defaults by the Company on any of its indebtedness, the Company could also be declared in default on its derivative obligations.

16.    COMMITMENTS AND CONTINGENCIES


Securities Class Actions Filed in Federal Court


On August 17, 2016, three securities class action complaints were filed in the Eastern District of New York (the "District Court") against the Company alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The three complaints are: (1) Flora v. The Hain Celestial Group, Inc., et al., (the “Flora Complaint”); (2) Lynn v. The Hain Celestial Group, Inc., et al. (the “Lynn Complaint”); and (3) Spadola v. The Hain Celestial Group, Inc., et al. (the “Spadola Complaint” and, together with the Flora and Lynn Complaints, the “Securities Complaints”). On June 5, 2017, the courtDistrict Court issued an order for consolidation, appointment of Co-Lead Plaintiffs and approval of selection of co-lead counsel. Pursuant to this order, the Securities Complaints were consolidated under the caption In re The Hain Celestial Group, Inc. Securities Litigation (the(the “Consolidated Securities Action”), and Rosewood Funeral Home and Salamon Gimpel were appointed as Co-Lead Plaintiffs. On June 21, 2017, the Company received notice that plaintiff Spadola voluntarily dismissed his claims without prejudice to his ability to participate in the Consolidated Securities Action as an absent class member. The Co-Lead Plaintiffs in the Consolidated Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalf of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”). The Amended Complaint namesnamed as defendants the Company and certain of its current and former officers (collectively, the “Defendants”) and assertsasserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls. Defendants filed a motion to dismiss the Amended Complaint on October 3, 2017.2017 which the District Court granted on March 29, 2019, dismissing the case in its entirety, without prejudice to replead. Co-Lead Plaintiffs filed an oppositiona Second Amended Consolidated Class Action Complaint on December 1, 2017,May 6, 2019 (the “Second Amended Complaint”). The Second Amended Complaint again named as defendants the Company and certain of its former officers and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations similar to those in the Amended Complaint, including materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results, and internal controls. Defendants filed the reply on January 16, 2018. Thea motion to dismiss is pending before the Court.

Stockholder Derivative Complaints FiledSecond Amended Complaint on June 20, 2019. On April 6, 2020, the District Court granted Defendants’ motion to dismiss the Second Amended Complaint in Stateits entirety, with prejudice. Co-Lead Plaintiffs appealed the District Court’s decision dismissing the Second Amended Complaint to the United States Court

of Appeals for the Second Circuit (the "Second Circuit"). By decision dated December 17, 2021, the Second Circuit vacated the District Court’s judgment and remanded the case for further proceedings. On September 16, 2016, a stockholder derivative complaint, Paperny v. Heyer, et al. (the “Paperny Complaint”), was filed in New York State SupremeApril 6, 2022, the District Court in Nassau County againstissued an order directing the Board of Directors and certain officersparties to submit position papers outlining their views regarding: (a) the scope of the Company alleging breachCourt's reconsideration of fiduciary duty, unjust enrichment, lackDefendants’ Motion to Dismiss the Second Amended Complaint; and (b) the appropriate procedure the Court should follow in light of oversightthe Second Circuit's opinion. On April 14, 2022, the District Court entered an order setting the schedule for, and corporate waste.determining the scope of, supplemental briefing on Defendants’ Motion to Dismiss the Second Amended Complaint. The parties submitted supplemental briefing between May 12, 2022 and June 23, 2022. In June 2022, the District Court referred Defendants’ Motion to Dismiss the Second Amended Complaint to a United States Magistrate Judge (the “Magistrate Judge”) for a Report and Recommendation. On December 2, 2016November 4, 2022, the Magistrate Judge issued a Report and December 29, 2016, two additional stockholder derivative complaints were filed in New York State SupremeRecommendation recommending that the District Court in Nassau County againstgrant Defendants’
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Motion to Dismiss the Board of Directors and certain officers under the captions Scarola v. Simon (the “Scarola Complaint”) and Shakir v. Simon (the “Shakir Complaint” and, togetherSecond Amended Complaint with the Paperny Complaint and the Scarola Complaint, the “Derivative Complaints”), respectively.  Both the Scarola Complaint and the Shakir Complaint allege breach of fiduciary duty, lack of oversight and unjust enrichment.  On February 16, 2017,prejudice. Any objections by the parties forto the Derivative Complaints entered into a stipulation consolidating the matters under the caption In re The Hain Celestial Group (the “Consolidated Derivative Action”) in New York State Supreme Court in Nassau County, ordering the Shakir Complaint as the operative complaint. OnReport and Recommendation are due by November 2, 2017, the parties agreed to stay the Consolidated Derivative Action until April 11, 2018.18, 2022.


Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court


On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the former Board of Directors and certain former officers of the Company under the captions Silva v. Simon, et al. (the “Silva Complaint”) and Barnes v. Simon, et al. (the “Barnes Complaint”), respectively. Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment.


On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the former Board of Directors and certain former officers of the Company. The complaint allegesalleged that the Company’s former directors and certain former officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results. The complaint also allegesalleged that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and includes claims for breach of fiduciary duty, unjust enrichment and corporate waste. On August 9, 2017, the District Court granted an order to unseal this case and reveal Gary Merenstein as the plaintiff.plaintiff (the “Merenstein Complaint”).


On August 10, 2017, the courtDistrict Court granted the partiesparties' stipulation to consolidate the Barnes Compliant,Complaint, the Silva Complaint and the Merenstein CompliantComplaint under the caption In re The Hain Celestial Group, Inc. Stockholder Class and Derivative Litigation (the “Consolidated Stockholder Class and Derivative Action”) and to appoint Robbins Arroyo LLP and Scott+Scott as Co-Lead Counsel, with the Law Offices of Thomas G. Amon as Liaison Counsel for Plaintiffs. On September 14, 2017, a related complaint was filed under the caption Oliver v. Berke, et al. (the(the “Oliver Complaint”), and on October 6, 2017, the Oliver Complaint was consolidated with the Consolidated Stockholder Class and Derivative Action. The Plaintiffs filed their consolidated amended complaint under seal on October 26, 2017. On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move,

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or otherwise respond to the consolidated amended complaint through and including 30 days after a decision iswas rendered on the motion to dismiss the Amended Complaint in the consolidatedConsolidated Securities Class Actions,Action, described above.


SEC InvestigationOn March 29, 2019, the District Court in the Consolidated Securities Action granted Defendants’ motion, dismissing the Amended Complaint in its entirety, without prejudice to replead. Co-Lead Plaintiffs in the Consolidated Securities Action filed the Second Amended Complaint on May 6, 2019. The parties to the Consolidated Stockholder Class and Derivative Action agreed to continue the stay of Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through 30 days after a decision on Defendants' motion to dismiss the Second Amended Complaint in the Consolidated Securities Action.


As previously disclosed,On April 6, 2020, the District Court granted Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action, with prejudice. Pursuant to the terms of the stay, Defendants in the Consolidated Stockholder Class and Derivative Action had until May 6, 2020 to answer, move, or otherwise respond to the complaint in this matter. This deadline was extended, and Defendants moved to dismiss the Consolidated Stockholder Class and Derivative Action Complaint on June 23, 2020, with Plaintiffs’ opposition due August 7, 2020.

On July 24, 2020, Plaintiffs made a stockholder litigation demand on the current Board containing overlapping factual allegations to those set forth in the Consolidated Stockholder Class and Derivative Action. On August 10, 2020, the District Court vacated the briefing schedule on Defendants’ pending motion to dismiss in order to give the Board of Directors time to consider the demand. On each of September 8 and October 8, 2020, the District Court extended its stay of any applicable deadlines for 30 days to give the Board of Directors additional time to complete its evaluation of the demand. On November 3, 2020, Plaintiffs were informed that the Board of Directors had finished investigating and resolved, among other things, that the demand should be rejected. On November 6, 2020, Plaintiffs and Defendants notified the District Court that Plaintiffs were evaluating the rejection of the demand, sought certain additional information and were assessing next steps, and requested that the District Court extend the stay for an additional 30 days, to on or around December 7, 2020. The Parties then filed a number of additional joint status reports, requesting that the District Court continue the stay of applicable deadlines through December 30, 2021. In light of the Second Circuit vacating the District Court’s judgment in the Consolidated Securities Action referenced above and remanding the case for further proceedings, the Parties submitted a joint status report on December 29, 2021 requesting that the District Court continue the temporary stay pending the District Court’s reconsideration of the Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action. The District Court has extended the temporary stay through December 30, 2022.

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Baby Food Litigation

Since February 2021, the Company voluntarily contactedhas been named in numerous consumer class actions alleging that the SECCompany’s Earth’s Best baby food products (the “Products”) contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. Those actions have now been transferred and consolidated as a single lawsuit in August 2016the U.S. District Court for the Eastern District of New York captioned In re Hain Celestial Heavy Metals Baby Food Litigation, Case No. 2:21-cv-678 (the "Consolidated Proceeding"), which generally alleges that the Company violated various state consumer protection laws and asserts other state and common law warranty and unjust enrichment claims related to advise itthe alleged failure to disclose the presence of these metals, arguing that consumers would have either not purchased the Products or would have paid less for them had the Company made adequate disclosures. The Court appointed interim class counsel for Plaintiffs in the Consolidated Proceeding, and Plaintiffs filed a Consolidated Amended Class Action Complaint on March 18, 2022. The Company intends to file a motion to dismiss the Consolidated Amended Class Action Complaint, and its motion to dismiss is due on November 7, 2022. One consumer class action is pending in New York Supreme Court, Nassau County. The Company has moved to stay or transfer this case to the Consolidated Proceeding and that motion is pending. The Company denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled.

The claims raised in these lawsuits were brought in the wake of a highly publicized report issued by the U.S. House of Representatives Subcommittee on Economic and Consumer Policy on Oversight and Reform, dated February 4, 2021 (the “House Report”), addressing the presence of heavy metals in baby foods made by certain manufacturers, including the Company. Since the publishing of the House Report, the Company has also received information requests with respect to the advertising and quality of its baby foods from certain governmental authorities, as such authorities investigate the claims made in the House Report. The Company is fully cooperating with these requests and is providing documents and other requested information. The Company has been named in one civil government enforcement action, State of New Mexico ex rel. Balderas v. Nurture, Inc., et al., which was filed by the New Mexico Attorney General against the Company and several other manufacturers based on the alleged presence of heavy metals in their baby food products. The Company and several other manufacturers moved to dismiss the New Mexico Attorney General’s lawsuit, which motion the Court denied. The Company filed its answer to the New Mexico Attorney General’s amended complaint on April 23, 2022. The Company denies the New Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law.

In addition to the consumer class actions discussed above, the Company is currently named in five lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s delayProducts, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. Three of these lawsuits name multiple plaintiffs alleging claims of physical injuries. These lawsuits generally allege injuries related to neurological development disorders such as autism and attention deficit hyperactivity disorder. In the matter, Palmquist et al., v. The Hain Celestial Group, Inc., pending in U.S. District Court, Southern District of Texas, the filingCourt has set a trial date of February 6, 2023, while the Company awaits decisions on dispositive motions. In the matter, NC v. The Hain Celestial Group, et al., pending in Superior Court for the State of California, County of Los Angeles, the Court has set a trial date of May 2, 2023. The Company denies that its periodic reports and the performanceProducts led to any of the independent review conducted by the Audit Committee.  The Company has continued to provide information to the SEC on an ongoing basis, including, among other things, the results of the independent review of the Audit Committee as well as other information pertaining to its internal accounting review relating to revenue recognition.  The SEC has issued subpoenas to the Company relevant to its investigation.  The Company is in the process of responding to the SEC’s requests for informationalleged injuries and intends to cooperate fully with the SEC.will defend these cases vigorously.


Other


In addition to the litigation described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business. While the results of

With respect to all litigation and claims cannot be predicted with certainty,related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably possible losses of suchestimated. For the matters individually anddisclosed in the aggregate, are not material. Additionally,this note, if the Company believesdetermines that a liability is probable and the probable final outcomeloss can be reasonably estimated, the Company discloses the liability recorded. As of suchthe end of the period covered by this report, the Company has not recorded a liability for any of the matters willdisclosed in this note. It is possible that some matters could require the Company to pay damages, incur other costs or establish accruals in amounts that could not have a material adverse effect onbe reasonably estimated as of the Company’s consolidated resultsend of operations, financial position, cash flows or liquidity.the period covered by this report.


15.17.    SEGMENT INFORMATION


Prior to July 1, 2017, the Company’s operations were managed in eight operatingOur organization structure consists of two geographic based reportable segments: North America and International. Our North America reportable segment consists of the United States United Kingdom, Tilda, Hain Pure Protein Corporation (“HPPC”), EK Holdings, Inc. (“Empire”), Canada, Europe and Cultivate. The United States operating segment was also a reportable segment. The United Kingdom and Tilda operating segments were reported in the aggregate as “United Kingdom”, while HPPC and Empire were reported in the aggregate as “Hain Pure Protein,” and Canada Europe and Cultivate were combined and reported as “Restoperating segments. Our International reportable segment is comprised of World.”

Effective July 1, 2017, due to changes to the Company’s internal management and reporting structure, thethree operating segments: United Kingdom, operations of the Ella’s Kitchen® brand, which was previously included within the United States reportable segment, was moved to the United Kingdom reportable segment. As a result, the Company is now managed in nine operating segments: the United States, United Kingdom, Tilda, Ella’s Kitchen UK, HPPC, Empire, Europe, Canada and Cultivate. Ella’s Kitchen UKEurope. This structure is now combinedin line with the United Kingdom and Tilda operating segments and is reported within the United Kingdom reportable segment. There were no changes to the Hain Pure Protein reportable segment or Rest of World. The prior period segment information contained below has been adjusted to reflect the Company’s new operating and reporting structure.

Net sales and operating income are the primary measures used by the Company’show our Chief Operating Decision Maker (“CODM”) assesses our performance and allocates resources.

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We use segment net sales and operating income to evaluate segment operating performance and to decide howallocate resources. We believe these measures are most relevant in order to allocate resources to segments. The CODM is the Company’s Chief Executive Officer. Expenses related toanalyze segment results and trends. Segment operating income excludes certain centralized administration functions thatgeneral corporate expenses (which are not specifically related to an operating segment are included in “Corporatea component of selling, general and Other.” Corporateadministrative expenses), impairment and Other expenses are comprised mainly of the compensation and related expenses of certain of the Company’s senior executive officers and other selected employees who perform duties related to the entire enterprise, as well as expenses for certain professional fees, facilities, and other items which benefit the Company as a whole. Additionally, acquisition related expenses, restructuring, and integration, charges and other along with accounting review and remediation costs, are included in “Corporate and Other.” Expenses that are managed centrally, but can be attributed to a segment, such as employee benefits and certain facility costs, are allocated based on reasonable allocation methods. Assets are reviewed by the CODM on a consolidated basis and therefore are not reported by operating segment.charges.


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The following tables set forth financial information about each of the Company’s reportable segments. Transactions between reportable segments were insignificant for all periods presented.
 Three Months Ended December 31, Six Months Ended December 31,
 2017
2016 2017 2016
Net Sales:       
United States$270,303
 $278,640
 $533,962
 $532,872
United Kingdom238,201
 212,312
 460,646
 432,463
Hain Pure Protein158,972
 152,979
 278,029
 269,648
Rest of World107,728
 96,068
 210,843
 186,480
 $775,204
 $739,999
 $1,483,480
 $1,421,463
        
Operating Income:       
United States$21,861
 $39,928
 $42,722
 $58,722
United Kingdom13,598
 9,321
 23,199
 17,140
Hain Pure Protein5,328
 3,541
 7,570
 2,523
Rest of World10,535
 7,477
 19,532
 12,532
 $51,322
 $60,267
 $93,023
 $90,917
Corporate and Other (a)
(15,029) (18,867) (25,247) (35,766)
 $36,293
 $41,400
 $67,776
 $55,151
Three Months Ended September 30,
20222021
Net Sales:
North America$288,396 $265,525 
International150,955 189,378 
$439,351 $454,903 
Operating Income (Loss):
North America$24,445 $16,842 
International7,675 24,069 
32,120 40,911 
Corporate and Other (a)
(16,297)(15,364)
$15,823 $25,547 
(a) Includes $5,092 In addition to general Corporate and $7,113 of accounting review and remediation costs, net of insurance proceeds and acquisition relatedOther expenses restructuring and integration chargesas described above, for the three months ended December 31, 2017September 30, 2022, Corporate and 2016, respectively. Such expenses forOther included $94 of Productivity and transformation costs. For the sixthree months ended December 31, 2017September 30, 2021, Corporate and 2016 were $6,347Other included $2,057 of Productivity and $13,534, respectively.transformation costs.


The Company’s long-lived assets, which primarily representCompany's net property, plant and equipment,sales by geographic area wereproduct category(1) are as follows:

Three Months Ended September 30,
20222021
Growth324,478 333,104 
Fuel95,726 97,254 
Simplify19,147 24,545 
Total$439,351 $454,903 
(1)The Growth brands consist of our Turbocharge and Targeted Investment categories, which together are comprised of snacks, tea, baby, yogurt, plant-based meat, non-dairy beverages and personal care. The Fuel brands are pantry brands in categories such as soup, cooking oils and nut butters. The Simplify brands include all other brands.

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 December 31,
2017		 June 30,
2017
United States$187,960
 $194,348
United Kingdom173,299
 165,396
All Other79,161
 63,330
Total$440,420
 $423,074


The Company’s net sales by geographic region, which are generally based on the location of the Company’s subsidiary,subsidiaries, were as follows:

Three Months Ended September 30,
20222021
United States$259,508 $233,487 
United Kingdom109,160 123,748 
All Other70,683 97,668 
Total$439,351 $454,903 

The Company’s long-lived assets, which represent net property, plant and equipment and operating lease right-of-use assets, were as follows by geographic area:
September 30,
2022		June 30,
2022
United States$186,865 $182,038 
United Kingdom121,867 133,213 
All Other88,325 96,845 
Total$397,057 $412,096 

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 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
United States$445,031
 $446,412
 $842,382
 $832,180
United Kingdom238,201
 212,312
 460,646
 432,463
All Other91,972
 81,275
 180,452
 156,820
Total$775,204
 $739,999
 $1,483,480
 $1,421,463


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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 December 31, 2017 theretoSeptember 30, 2022 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. Forward looking2022. Forward-looking statements in this Form 10-Q are qualified by the cautionary statement included in this Form 10-Q under the sub-heading “Cautionary Note Regarding Forward Looking Information”“Forward-Looking Statements” in the introduction of this Form 10-Q.


Overview


The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993 and is headquartered in Lake Success, New York. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet — To Create and Inspire A Healthier Way of LifeTM andtenet. The Company continues to be thea leading marketer, manufacturer, and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug, and convenience stores in over 8075 countries worldwide.


With a proven track record of strategic growth and profitability, theThe Company manufactures, markets, distributes, and sells organic and natural products under brand names that are sold as “better-for-you” products, providing consumers with the opportunity to lead A Healthier Way of LifeTM®. Hain Celestial is a leader in many organicThe Company’s food and natural products categories, with many recognizedbeverage brands in the various market categories it serves, including Almond Dream®, Arrowhead Mills®, Bearitos®, Better BeanTM, BluePrint®,include Celestial Seasonings®, Clarks™, Coconut Dream®, Cully & Sully®, Danival®, DeBoles®, Earth’s Best®, Ella’s Kitchen®, Empire®, Europe’s Best®, Farmhouse Fare®, Frank Cooper’s®, FreeBird®, Gale’s®, Garden of Eatin’®, GG UniqueFiberTM, Hain Pure Foods®, Hartley’s®, Health Valley®, Imagine®, Johnson’s Juice Co.®, Joya®, Kosher Valley®, Lima®, Linda McCartney’s® (under license), MaraNatha®, Natumi®, New Covent Garden Soup Co.®, Plainville FarmsParmCrisps®, Rice Dream®, Robertson’s®, Rudi’s Gluten-Free BakeryRose’s®, Rudi’s Organic Bakery® (under license), Sensible Portions®, Spectrum Organics®, Soy Dream®, Sun-Pat®, SunSpire®, Terra®, The Greek Gods®, TildaThinsters®, Walnut Acres®, WestSoy®, Yorkshire ProvenderTM® and Yves Veggie Cuisine®. The Company’s personal care products are marketed under thebrands include Alba Botanica®, Avalon Organics®, Earth’s Best®, JASON®, Live Clean® and Queen Helene®.

In fiscal year 2022, the Company announced its “Hain 3.0” long-term strategy, to support the Company’s continued evolution to position the Company to be a global health and wellness company with industry-leading topline growth. The drivers of growth for Hain 3.0, which the Company intends to fund through productivity initiatives, are:

•Distribution,
•Innovation, and
•Marketing.

We have re-segmented the brand portfolio with a more global view to where we have the most growth potential. As a result, we have migrated from a strategy focused on rejuvenating North America behind a construct of “Get Bigger” and “Get Better” brand categories to one that focuses on growing global brands in categories where we think we have the most potential. The categories we have identified are called Growth and Fuel:

•The Growth category includes Turbocharge brands and Targeted Investment brands. Turbocharge brands are leading-share brands in categories that we believe provide the most opportunity for growth. The Targeted Investment brands are made up of leading-share brands in lower-growth categories. The Growth category consists of our brands in snacks, tea, baby, yogurt, plant-based meat, non-dairy beverages and personal care.

•The Fuel brands are stable brands that will be leveraged to fuel investment in the Growth brands. The Fuel brands are premium pantry brands with scale, in categories such as soup, cooking oils and nut butters.
Exploration of Divestiture
We are establishing the foundation and the tools to deliver Hain 3.0 by stabilizing our business, delivering strong margin improvement and continuing to grow our net sales. Additionally, as part of Hain Pure Protein3.0, we plan to continue to simplify our brand portfolio as we continue to identify brands that are declining and have low margins, which we refer to as Simplify brands. We view Simplify brands to be subscale declining businesses that have limited long-term potential for the Company, and therefore expect to manage such brands for profit until they are potentially divested, likely over the course of the next several years. We see momentum in our Growth brands and believe that we are well-positioned for the long term. As Hain 3.0 progresses, acquisitions are expected to play a role to help us strengthen our position in our priority categories.





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Supply Chain Disruptions and Higher Costs

We continue to experience disruption in our supply chain network, including the supply of certain ingredients, packaging, and other sourced materials, which has resulted in higher costs, including escalating transportation and other supply chain costs. Both the disruptions and higher costs have resulted in higher inventory levels. We expect this higher cost environment to continue, although we expect these higher costs to be partially mitigated by pricing actions we have implemented to date and further pricing actions that we plan to implement in fiscal year 2023. It is possible that more significant disruptions to our supply chain could occur.

Russia-Ukraine War

Although we have no material assets in Russia, Belarus or Ukraine, our supply chain was adversely impacted by the Russia-Ukraine war during the fiscal year ended June 30, 2022 and the quarter ended September 30, 2022, and we continue to face other challenges and risks arising from the war. In particular, the war has added significant costs to existing inflationary pressures through increased energy, fuel, and raw material prices. Further, beyond increased costs, labor challenges and other factors have led to supply chain disruptions. While, to date, we have been able to identify replacement raw materials where necessary, we have incurred increased costs in doing so. For example, the supply of sunflower oil has become constrained, compelling us to identify and procure alternative oils. The Company is currently exploring the divestiture of its Hain Pure Protein business. The Company cannot give any assurances that this will resultwar has also negatively impacted consumer sentiment, particularly in any specific action or regarding the outcome or timing of any action.

ChangeEurope, with some consumers shifting to lower-priced products, which has somewhat affected demand for our products. Additionally, we face increased cybersecurity risks, as companies based in Segments

Prior to July 1, 2017, the Company’s operations were managed in eight operating segments: the United States United Kingdom, Tilda, Hain Pure Protein Corporation (“HPPC”), EK Holdings, Inc. (“Empire”), Canada, Europe and Cultivate. its allied countries have become targets of malicious cyber activity. While we are continuing to monitor and manage the impacts of the war on our business, the extent to which the Russia-Ukraine war and the related economic impact may affect our financial condition or results of operations remains uncertain.

COVID-19

The United StatesCOVID-19 pandemic continues to contribute to challenging and unprecedented conditions. Challenges exacerbated by the ongoing effects of the pandemic include but are not limited to:

•manufacturing and supply chain challenges, including labor market shortages;
•a shifting demand environment as a result of changing consumer behaviors amid uncertain economic conditions; and
•increased costs of operating segment was also a reportable segment. The United Kingdomour business and Tilda operating segments were reported inmanaging our supply chain.

If we are unable to successfully manage our business through the aggregate as “United Kingdom”, while HPPCcontinued challenges and Empire were reported in the aggregate as “Hain Pure Protein,” and Canada, Europe and Cultivate were combined and reported as “Rest of World.”

Effective July 1, 2017, due to changesuncertainty related to the Company’s internal managementCOVID-19 pandemic, our business and reporting structure, the United Kingdom operations of the Ella’s Kitchen® brand, which was previously included within the United States reportable segment, was moved to the United Kingdom reportable segment. As a result,operating results could be materially adversely affected.

Acquisition

On December 28, 2021, the Company is now managed in nine operating segments:acquired all outstanding stock of Proven Brands, Inc. (and its subsidiary That's How We Roll LLC) and KTB Foods Inc., collectively doing business as "That's How We Roll" ("THWR"), the United States, United Kingdom, Tilda, Ella’s Kitchen UK, HPPC, Empire, Europe, Canadaproducer and Cultivate. Ella’s Kitchen UK is now combined with the United Kingdommarketer of ParmCrisps® and Tilda operating segments and is reported within the United Kingdom reportable segment. There were no changes to the Hain Pure Protein reportable segment or Rest of World. All prior period data throughout this Management’s Discussion & Analysis of Financial Condition and Results of Operations has been adjusted to reflect the new operating and reporting structure.Thinsters®. See Note 15, Segment Information4, Acquisitions and Dispositions, in the Notes to the Consolidated Financial Statements included in Part II, Item 18 of this Form 10-Q10-K for additional details.

Our business strategy is to integrate our brands under one management team within each operating segment and employ uniform marketing, sales and distribution programs when attainable. We believe that, by integrating our various brands, we will continue to achieve economies of scale and enhanced market penetration. We seek to capitalize on the equity of our brands and the distribution

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achieved through each of our acquired businesses with strategic introductions of new products that complement existing lines to enhance revenues and margins.


Results of Operations

Comparison of Three Months Ended December 31, 2017September 30, 2022 to Three Months Ended December 31, 2016September 30, 2021


Consolidated Results


The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended December 31, 2017September 30, 2022 and 20162021 (amounts in thousands, other than per share data and percentages, which may not add due to rounding):
 Three Months EndedChange in
 September 30, 2022September 30, 2021DollarsPercentage
Net sales$439,351 100.0%$454,903 100.0%$(15,552)(3.4)%
Cost of sales345,016 78.5%349,485 76.8%(4,469)(1.3)%
Gross profit94,335 21.5%105,418 23.2%(11,083)(10.5)%
Selling, general and administrative expenses74,951 17.1%73,989 16.3%962 1.3%
Amortization of acquired intangible assets2,788 0.6%2,095 0.5%693 33.1%
Productivity and transformation costs773 0.2%3,983 0.9%(3,210)(80.6)%
Proceeds from insurance claim— —%(196)—%196 (100.0)%
Operating income15,823 3.6%25,547 5.6%(9,724)(38.1)%
Interest and other financing expense, net7,677 1.7%1,856 0.4%5,821 313.6%
Other income, net(1,790)(0.4)%(788)(0.2)%(1,002)127.2%
Income from operations before income taxes and equity in net loss (income) of equity-method investees9,936 2.3%24,479 5.4%(14,543)(59.4)%
Provision for income taxes2,631 0.6%4,542 1.0%(1,911)(42.1)%
Equity in net loss of equity-method investees382 0.1%526 0.1%(144)(27.4)%
Net income$6,923 1.6%$19,411 4.3%$(12,488)(64.3)%
Adjusted EBITDA$36,029 8.2%$47,316 10.4%$(11,287)(23.9)%
Diluted net income per common share$0.08 $0.20 $(0.12)(60.0)%
 Three Months Ended Change in
 December 31, 2017 December 31, 2016 Dollars Percentage
Net sales$775,204
 100.0% $739,999
 100.0% $35,205
 4.8%
Cost of sales630,933
 81.4% 601,606
 81.3% 29,327
 4.9%
   Gross profit144,271
 18.6% 138,393
 18.7% 5,878
 4.2%
Selling, general and administrative expenses90,372
 11.7% 85,187
 11.5% 5,185
 6.1%
Amortization of acquired intangibles4,909
 0.6% 4,693
 0.6% 216
 4.6%
Acquisition related expenses, restructuring and integration charges4,797
 0.6% 108
 — 4,689
 *
Accounting review and remediation costs, net of insurance proceeds4,451
 0.6% 7,005
 0.9% (2,554) (36.5)%
Long-lived asset impairment3,449
 0.4% —
 — 3,449
 100.0%
   Operating income36,293
 4.7% 41,400
 5.6% (5,107) (12.3)%
Interest and other financing expense, net6,513
 0.8% 5,097
 0.7% 1,416
 27.8%
Other (income)/expense, net(760) (0.1)% (1,353) (0.2)% 593
 43.8%
Income before income taxes and equity in net income of equity-method investees30,540
 3.9% 37,656
 5.1% (7,116) (18.9)%
(Benefit)/provision for income taxes(16,369) (2.1)% 10,509
 1.4% (26,878) *
Equity in net income of equity-method investees(194) — (38) — (156) *
Net income$47,103
 6.1% $27,185
 3.7% $19,918
 73.3%
            
Adjusted EBITDA$82,678
 10.7% $69,498
 9.4% $13,180
 19.0%
* Percentage is not meaningful


Net Sales


Net sales for the three months ended December 31, 2017September 30, 2022 were $775.2$439.4 million, an increasea decrease of $35.2$15.6 million, or 4.8%3.4%, from net sales of $740.0as compared to $454.9 million forin the three months ended December 31, 2016.September 30, 2021. On a constant currency basis, adjusted for the impact of acquisitions, divestitures and discontinued brands, net sales increaseddecreased approximately 1.9%$3.8 million, or 0.8%, from the prior year quarter. The increase in net sales wasquarter due to salesa decline in the International reportable segment, partially offset by growth in the United Kingdom, Europe, Hain Pure Protein and Canada businesses, partially offset by a decrease in net sales in the United StatesNorth America reportable segment. Further details of changes in net sales by segment are provided below.below in the Segment Results section.


Gross Profit


Gross profit for the three months ended December 31, 2017September 30, 2022 was $144.3$94.3 million, an increasea decrease of $5.9$11.1 million, or 4.2%10.5%, as compared to the prior year quarter. GrossAdditionally, gross profit margin of 21.5% was 18.6% oflower when compared with 23.2% in the prior year quarter. The decrease in gross profit was driven primarily by the International reportable segment, mainly due to lower net sales relatively flat period-over-period. Gross profit was favorably impacted by price realization and operating efficiencies in the United Kingdom and incremental gross profit onEurope operating segments, higher sales, specifically in Canadaenergy and Europe, offset by a decreasesupply chain costs, as well as under absorption of overhead costs at our manufacturing facilities when compared to the prior year period. The North America reportable segment had an increase in gross profit mainly driven by top-line sales due to pricing increases and cost improvements driven by higher productivity, partly offset by inflation and lower net sales in the United States due to increased freight and commodity costs and unfavorable mix, as well as higher commodity costs inCanada operating segment when compared with the United Kingdom.prior year quarter.



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Selling, General and Administrative Expenses


Selling, general and administrative expenses were $90.4$75.0 million for the three months ended December 31, 2017,September 30, 2022, an increase of $5.2$1.0 million, or 6.1%1.3%, from $85.2$74.0 million for the prior year quarter. Selling, generalThe increase was primarily driven by the North America reportable segment and administrative expenses increased primarilyCorporate, with the United States operating segment accounting for the increase in the North America reportable segment due to higher marketing investment coststhe acquisition of THWR. The increase was partially offset by a decrease in selling expenses primarily in the United States. Selling, generalInternational reportable segment as well as efficiencies gained from the Company's productivity and administrative expenses as a percentage of net sales was 11.7% in the three months ended December 31, 2017 and 11.5% in the prior year quarter, reflecting an increase of 20 basis points primarily attributable to the aforementioned item.transformation initiatives.


Amortization of Acquired IntangiblesIntangible Assets


Amortization of acquired intangibles was $4.9$2.8 million for the three months ended December 31, 2017,September 30, 2022, an increase of $0.2$0.7 million from $4.7$2.1 million in the prior year quarter due to the acquisition of THWR in the second quarter of the prior fiscal year.

Productivity and Transformation Costs

Productivity and transformation costs were $0.8 million for the three months ended September 30, 2022, a decrease of $3.2 million from $4.0 million in the prior year quarter. The decrease was primarily due to reduced spending related to productivity and transformation initiatives as the current transformation effort approaches its conclusion.

Operating Income

Operating income for the three months ended September 30, 2022 was $15.8 million compared to $25.5 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 $7.7 million for the three months ended September 30, 2022, an increase of $5.8 million, or 313.6%, from $1.9 million in the prior year quarter. The increase was dueresulted primarily from a higher outstanding debt balance driven primarily by the acquisition of THWR in the second quarter of the prior fiscal year as well as share repurchase activity during fiscal 2022. The increase is also attributable to higher borrowing rates compared to the intangibles acquired as a result of the Company’s acquisitions in the fourth quarter of fiscal 2017.prior year quarter. See Note 4, Acquisitions,9, Debt and Note 7, Goodwill and Other Intangible AssetsBorrowings, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.


Acquisition Related Expenses, Restructuring and Integration ChargesOther Income, Net


Acquisition related expenses, restructuring and integration charges were $4.8Other income, net totaled $1.8 million for the three months ended December 31, 2017, an increase of $4.7 million from $0.1September 30, 2022, compared to $0.8 million in the prior year quarter. The increasechange was primarily dueattributable to increased severance costs in the current year quarter as compared to the prior year period related to the closure of one of the Company’s manufacturing facilities in the United States and consulting fees incurred in connection with the Company’s Project Terra strategic review.

Accounting Review and Remediation Costs, net of Insurance Proceeds

Costs and expenses associated with the internal accounting review, remediation and other related matters were $4.5 million for the three months ended December 31, 2017, compared to $7.0 million in the prior year quarter.

Long-lived Asset Impairment

In the second quarter of fiscal 2018, the Company determined that it was more likely than not that certain fixed assets at one of its manufacturing facilities in the United States would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to utilize third-party manufacturers. As such, the Company recorded a $3.4 million non-cash impairment charge related to the closure of the facility for the three months ended December 31, 2017.

Operating Income

Operating income for the three months ended December 31, 2017 was $36.3 million, a decrease of $5.1 million, or 12.3%, from $41.4 million in the three months ended December 31, 2016. Operating income as a percentage of net sales was 4.7% in the second quarter of fiscal 2017 compared with 5.6% in the prior year quarter. The decrease in operating income as a percentage of net sales resulted from the items described above.

Interest and Other Financing Expense, net

Interest and other financing expense, net totaled $6.5 million for the three months ended December 31, 2017, an increase of $1.4 million, or 27.8%, from $5.1 million in the prior year quarter. The increase in interest and other financing expense, net resulted primarily from higher interest expense related to our revolving credit facility as a result of higher variable interest rates on outstanding debt. See Note 8, Debt and Borrowings, in the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q.

Other (Income)/Expense, net

Other (income)/expense, net totaled $0.8 million of income for the three months ended December 31, 2017, a decrease of $0.6 million from $1.4 million of income in the prior year quarter. Included in other (income)/expense, net were net unrealized foreign currency gains, which were higher in the current quarter than the prior year quarter principally due to the effectpartially offset by lower gain on sale of foreign currency movements on the remeasurement of foreign currency denominated loans.business.


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

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Income from operations before income taxes and equity in the net incomeloss of our equity-method investees for the three months ended December 31, 2017 and 2016September 30, 2022 was $30.5$9.9 million and $37.7compared to $24.5 million respectively.in the prior year quarter. The decrease was due to the items discussed above.



Provision for Income Taxes


The provision for income taxes includes federal, foreign, state and local income taxes. Our income tax benefitexpense was $16.4$2.6 million for the three months ended December 31, 2017September 30, 2022 compared to $10.5$4.5 million of tax expense in the prior year quarter.


OurThe effective income tax rate was (53.6)%an expense of 26.5% and 27.9% of pre-tax income18.6% for the three months ended December 31, 2017September 30, 2022 and 2016,2021, respectively. The effective rate for the three months ended December 31, 2017 was primarily impacted by the enactment of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. The Act significantly revised the U.S. corporate income tax regime by lowering the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, repealing the deduction for domestic production activities, imposing additional limitations on the deductibility of executive officers’ compensation, implementing a territorial tax system, and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. As a fiscal year-end taxpayer, certain provisions of the Act impacted the Company in our second quarter ended December 31, 2017, while other provisions will impact the Company beginning in fiscal 2019.

As the Company has a June 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. federal statutory rate of approximately 28.1% for fiscal 2018 and a 21% U.S. federal statutory rate for subsequent fiscal years. The three months ended December 31, 2017 included the impact of a $29.3 million reduction of the value of the Company’s net deferred tax liabilities as a result of the lowering of the U.S. corporate income tax rate, partially offset by an estimated $5.2 million transition tax imposed on the deemed repatriation of deferred foreign income.

ASC 740 requires recording the effects of tax law changes in the period enacted as discrete items. However, the SEC issued Staff Accounting Bulletin No. 118 which permits filers to record provisional amounts during a measurement period ending no later than one year from the date of the Act’s enactment. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the Act; however, the Company has made a reasonable estimate of the effects on the existing deferred balances as well as the computation of the one-time transition tax. The final transition impacts of the Act may differ from the Company’s estimates, possibly materially. Both the tax benefit and the tax charge represent provisional amounts and are subject to change due to further interpretations of the Act, legislative action to address questions that arise because of the Act, any changes in accounting standards for income taxes or related interpretations in response to the Act and/or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including historical records, changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries as well as the Company’s ongoing analysis of the Act. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax or any additional outside basis differences inherent in the entities, as these amounts continue to be indefinitely reinvested in foreign operations. However, we do intend to further study changes enacted by the Act, costs of repatriation and the current and future cash needs of foreign operations to determine whether there is an opportunity to repatriate foreign cash balances in the future on a tax-efficient basis.

The effective tax rate for the three months ended December 31, 2016September 30, 2022 increased due to tax expense related to stock-based compensation and uncertain tax positions. The effective income tax rate for the three months ended September 30, 2021 was favorablymainly decreased due to the reversal of uncertain tax position accruals based on filing and approval of certain elections by the tax authorities. The effective income tax rates in each period were also impacted by the geographical mix of earnings and a reduction in the statutory tax rate in the United Kingdom enacted in the first quarter of fiscal 2017. Our effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.taxes.



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Equity in Net IncomeLoss of Equity-Method Investees


Our equity in net incomeloss from our equity-method investments for the three months ended December 31, 2017 increased by $0.2September 30, 2022 was a loss of $0.4 million when compared to three months ended December 31, 2016.$0.5 million in the prior year quarter. See Note 12, 13, Investments and Joint Ventures, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.


Net Income


Net income for the three months ended December 31, 2017 and 2016September 30, 2022 was $47.1$6.9 million, and $27.2 million, respectively, or $0.45 and $0.26$0.08 per diluted share, respectively.compared to $19.4 million, or $0.20 per diluted share, in the prior year quarter. The increasedecrease was attributable to the factors noted above.


Adjusted EBITDA


Our Adjusted EBITDA was $82.7$36.0 million and $69.5$47.3 million for the three months ended December 31, 2017September 30, 2022 and 2016,2021, 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. On a constant currency basis, adjusted EBITDA decreased by $8.7 million, or 18.3%, from $47.3 million for the three months ended September 30, 2021 to $38.6 million for the three months ended September 30, 2022.


Segment Results


The following table provides a summary of net sales and operating income (loss) by reportable segment for the three months ended December 31, 2017September 30, 2022 and 2016:2021:

(dollars in thousands) United States United Kingdom Hain Pure Protein Rest of World Corporate and Other Consolidated(dollars in thousands)North AmericaInternationalCorporate and OtherConsolidated
Net sales            Net sales
Three months ended 12/31/17 $270,303
 $238,201
 $158,972
 $107,728
 $—
 $775,204
Three months ended 12/31/16 278,640
 212,312
 152,979
 96,068
 —
 739,999
Three months ended 9/30/22Three months ended 9/30/22$288,396 $150,955 $— $439,351 
Three months ended 9/30/21Three months ended 9/30/21265,525 189,378 — 454,903 
$ change $(8,337) $25,889
 $5,993
 $11,660
 n/a
 $35,205
$ change$22,871 $(38,423)n/a$(15,552)
% change (3.0)% 12.2% 3.9% 12.1% n/a
 4.8 %% change8.6 %(20.3)%n/a(3.4)%
            
Operating income (loss)            Operating income (loss)
Three months ended 12/31/17 $21,861
 $13,598
 $5,328
 $10,535
 $(15,029) $36,293
Three months ended 12/31/16 39,928
 9,321
 3,541
 7,477
 (18,867) 41,400
Three months ended 9/30/22Three months ended 9/30/22$24,445 $7,675 $(16,297)$15,823 
Three months ended 9/30/21Three months ended 9/30/2116,842 24,069 (15,364)25,547 
$ change $(18,067) $4,277
 $1,787
 $3,058
 $3,838
 $(5,107)$ change$7,603 $(16,394)$(933)$(9,724)
% change (45.2)% 45.9% 50.5% 40.9% 20.3% (12.3)%% change45.1 %(68.1)%6.1 %(38.1)%
            
Operating income margin            Operating income margin
Three months ended 12/31/17 8.1 % 5.7% 3.4% 9.8% n/a
 4.7 %
Three months ended 12/31/16 14.3 % 4.4% 2.3% 7.8% n/a
 5.6 %
Three months ended 9/30/22Three months ended 9/30/228.5 %5.1 %n/a3.6 %
Three months ended 9/30/21Three months ended 9/30/216.3 %12.7 %n/a5.6 %


United StatesNorth America


Our net sales in the United StatesNorth America reportable segment for the three months ended December 31, 2017September 30, 2022 were $270.3$288.4 million, a decreasean increase of $8.3$22.9 million, or 3.0%8.6%, from net sales of $278.6$265.5 million in the prior year quarter. On a constant currency basis, adjusted for the impact of the THWR acquisition and divestitures, net sales increased by 3.4%. In the United States operating segment, adjusted sales were higher compared to the prior year quarter mainly due to stronger sales in snacks, yogurt, baby, and other product categories. In the Canada operating segment, adjusted sales decreased compared to the prior year quarter primarily due to lower sales in personal care product categories. Operating income in North America for the three months ended December 31, 2016. The decrease in net salesSeptember 30, 2022 was driven by declines in our Better-for-You-Snacks, Better-for-You-Pantry and Fresh Living platforms, partially offset by increases in our Tea, Pure Personal Care and Better-for-You-Baby platforms. In addition, the declines were driven by the strategic decision to no longer support certain lower margin stock keeping units (“SKUs”) in order to reduce complexity and$24.4 million, an increase gross margins as the Company continues its focus on its top fifty SKUsof $7.6 million from $16.8 million in the United States. The prior year quarter was negatively impacted by a realignment of customer inventories at certain distributor customers. Operating income in the United States for the three months ended December 31, 2017 was $21.9 million, a decrease of $18.1 million from operating income of $39.9 million for the three months ended December 31, 2016.quarter. The decreaseincrease in operating income was the result of the aforementioned decrease inmainly driven by top-line sales due to pricing increases and cost improvements driven by higher productivity, partly offset by inflation and lower net sales as well as higher marketing investment, increased freight and commodity costs, unfavorable mix, and costs associatedin the Canada operating segment when compared with the closure of one of our manufacturing facilities in the United States.


prior year quarter.
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United KingdomInternational


Our net sales in the United KingdomInternational reportable segment for the three months ended December 31, 2017September 30, 2022 were $238.2$151.0 million, an increasea decrease of $25.9$38.4 million, or 12.2%20.3%, from net sales of $212.3$189.4 million forin the three months ended December 31, 2016.prior year quarter. On a constant currency basis, net sales increased 5.1%decreased 6.7% from the prior year.year quarter primarily due to a decline in sales in the Europe operating segment, partially offset by an increase in sales in the Ella's Kitchen UK and United Kingdom operating segments. The net sales decrease in the Europe operating segment was primarily due to the loss of a large non-dairy co-manufacturing customer. The net sales increase in the United Kingdom operating segment was primarily due to growth from our Tilda®, Ella’s Kitchen®, Linda McCartney’s® Hartley’s® and Cully and Sully® brands. Also contributing to the increase in nethigher sales was the aforementioned price realization, as well as the acquisitions of The Yorkshire Provender Limited and Clarks UK Limited, both which occurred subsequent to December 31, 2016.private label grocery items. Operating income in the United Kingdomour International reportable segment for the three months ended December 31, 2017September 30, 2022 was $13.6$7.7 million, an increasea decrease of $4.3$16.4 million from $9.3operating income of $24.1 million for the three months ended December 31, 2016. The increase in operatingSeptember 30, 2021. Operating income was primarilylower in the current quarter when compared to the prior year quarter mainly due to the aforementioned increaselower gross profit resulting from a decline in sales, higher energy and supply chain costs, as well as operating efficiencies achieved at Hain Daniels.

Hain Pure Protein

Our net sales in the Hain Pure Protein segment for the three months ended December 31, 2017 were $159.0 million, an increaseunder absorption of $6.0 million, or 3.9%, from net sales of $153.0 million for the three months ended December 31, 2016. The increase in net sales was primarily due to growth of our FreeBird®, Plainville Farms® and Empire Kosher® brands, partially offset by a decrease in private label sales. Operating income in the segment for the three months ended December 31, 2017 was $5.3 million, an increase of $1.8 million, from $3.5 million for the three months ended December 31, 2016. The increase in operating income was primarily due to the aforementioned increase in net sales and lower conversionoverhead costs as a result of production improvements across the business.

Rest of World

Our net sales in Rest of World were $107.7 million for the three months ended December 31, 2017, an increase of $11.7 million, or 12.1%, from net sales of $96.1 million for the three months ended December 31, 2016. On a constant currency basis, net sales increased 5.7% from the prior year. The increase in net sales was primarily due to increased sales volume in Europe related to our branded business in grocery and health food channels and private label plant-based beverage business and increased sales in Canada driven by growth in our Sensible Portions®,Yves® and Live Clean® brands, as well as increased private label sales.Operating income in the segment for the three months ended December 31, 2017 was $10.5 million, an increase of $3.1 million, from $7.5 million for the three months ended December 31, 2016. The increase in operating income was primarily due to the aforementioned increase in sales as well as operating efficiencies achieved at our plant-based manufacturing facilities in Europe.facilities.


Corporate and Other


Our Corporate and Other category consists of expenses related to the Company’s centralized administrative functions, which do not specifically relate to an operating segment. Such Corporate and Other expenses are comprised mainly of the compensation and related expenses of certain of the Company’s senior executive officers and other employees who perform duties related to our entire enterprise as well as expenses for certain professional fees, acquisition and divestiture transaction costs, facilities, and other items which benefit the Company as a whole. Additionally, accounting review and remediation costs, net of insurance proceeds and acquisition related expenses, restructuring and integration charges are includedOur operating loss in Corporate and Other and were $5.1for the three months ended September 30, 2022 was $16.3 million, and $7.1an increase of $0.9 million, from operating loss of $15.4 million for the three months ended December 31, 2017 and 2016, respectively.

Refer to Note 15, Segment Information, in the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q.






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Results of Operations

Comparison of Six Months Ended December 31, 2017 to Six Months Ended December 31, 2016

Consolidated Results

The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the six months ended December 31, 2017 and 2016 (amounts in thousands, other than percentages which may not addSeptember 30, 2021. This change was primarily due to rounding):
 Six Months Ended Change in
 December 31, 2017 December 31, 2016 Dollars Percentage
Net sales$1,483,480
 100.0% $1,421,463
 100.0% $62,017
 4.4%
Cost of sales1,207,606
 81.4% 1,173,203
 82.5% 34,403
 2.9%
   Gross profit275,874
 18.6% 248,260
 17.5% 27,614
 11.1%
Selling, general and administrative expenses181,093
 12.2% 170,154
 12.0% 10,939
 6.4%
Amortization of acquired intangibles9,820
 0.7% 9,421
 0.7% 399
 4.2%
Acquisition related expenses, restructuring and integration charges10,643
 0.7% 568
 — 10,075
 *
Accounting review and remediation costs, net of insurance proceeds3,093
 0.2% 12,966
 0.9% (9,873) (76.1)%
Long-lived asset impairment3,449
 0.2% —
 — 3,449
 100.0%
   Operating income67,776
 4.6% 55,151
 3.9% 12,625
 22.9%
Interest and other financing expense, net12,828
 0.9% 10,178
 0.7% 2,650
 26.0%
Other (income)/expense, net(3,897) (0.3)% (1,865) (0.1)% (2,032) (109.0)%
Income before income taxes and equity in net income of equity-method investees58,845
 4.0% 46,838
 3.3% 12,007
 25.6%
(Benefit)/Provision for income taxes(7,899) (0.5)% 11,271
 0.8% (19,170) *
Equity in net income of equity-method investees(205) — (222) — 17
 7.7%
Net income$66,949
 4.5% $35,789
 2.5% $31,160
 87.1%
            
Adjusted EBITDA$142,190
 9.6% $115,116
 8.1% $27,074
 23.5%
* Percentage is not meaningful

Net Sales

Net sales for the six months ended December 31, 2017 were $1.48 billion, an increase of $62.0 million, or 4.4%, from net sales of $1.42 billion for the six months ended December 31, 2016. On a constant currency basis, net sales increased approximately 2.6% from the prior year period. The increase in net sales was due to sales growth across all segments, as described below.

Gross Profit

Gross profit for the six months ended December 31, 2017 was $275.9 million, an increase of $27.6 million, or 11.1%, as compared to the prior year period. Gross profit margin was 18.6% of net sales, up 110 basis points period-over-period. Gross profit was favorably impacted by more efficient trade spend in the United States in the current year period as compared to the prior year period, price realization and operating efficiencies in the United Kingdom, improved profitability at Hain Pure Protein as a result of lower conversion costs and incremental gross profit on higher sales and operating efficiencies, specifically in Canada and Europe.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $181.1 million for the six months ended December 31, 2017, an increase of $10.9 million, or 6.4%, from $170.2 million for the prior year period. Selling, general and administrative expenses increased primarily due to higher marketing investment and personnel costs in the United States. Selling, general and administrative expenses

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as a percentage of net sales was 12.2% in the six months ended December 31, 2017 and 12.0% in the prior year period, reflecting an increase of 20 basis points primarily attributable to the aforementioned item.

Amortization of Acquired Intangibles

Amortization of acquired intangibles was $9.8 million for the six months ended December 31, 2017, an increase of $0.4 million from $9.4 million in the prior year period. The increase was due to the intangibles acquired as a result of the Company’s acquisitions in the fourth quarter of fiscal 2017. See Note 4, Acquisitions, and Note 7, Goodwill and Other Intangible Assets, in the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q.

Acquisition Related Expenses, Restructuring and Integration Charges

Acquisition related expenses, restructuring and integration charges were $10.6 million for the six months ended December 31, 2017, an increase of $10.1 million from $0.6 million in the prior year period. The increase was primarily due to increased severance costs in the current year quarter as compared to the prior year period related to the closure of one of the Company’s manufacturing facilities in the United States and consulting fees incurred in connection with the Company’s Project Terra strategic review.

Accounting Review and Remediation Costs, net of Insurance Proceeds

Costs and expenses associated with the internal accounting review, remediation and other related matters were $8.1 million for the six months ended December 31, 2017, compared to $13.0 million in the prior year period. Included in accounting review and remediation costs for the six months ended December 31, 2017 were insurance proceeds of $5.0 million related to the reimbursement of costs incurred as part of the internal accounting review and the independent review by the Audit Committee and other related matters. The net amount of accounting review and remediation costs for the six months ended December 31, 2017 was $3.1 million.

Long-lived Asset Impairment

In the second quarter of fiscal 2018, the Company determined that it was more likely than not that certain fixed assets at one of its manufacturing facilities in the United States would be sold or otherwise disposed of before the end of their estimated useful lives due to the Company’s decision to utilize third-party manufacturers. As such, the Company recorded a $3.4 million non-cash impairment charge related to the closure of the facility for the six months ended December 31, 2017.

Operating Income

Operating income for the six months ended December 31, 2017 was $67.8 million, an increase of $12.6 million, or 22.9%, from $55.2 million in the six months ended December 31, 2016. Operating income as a percentage of net sales was 4.6% in the six months ended December 31, 2017 compared with 3.9% for the comparable period of fiscal 2016. The increase in operating income as a percentage of net sales resulted from the items described above.

Interest and Other Financing Expense, net

Interest and other financing expense, net totaled $12.8 million for the six months ended December 31, 2017, an increase of $2.7 million, or 26.0%, from $10.2 million in the prior year period. The increase in interest and other financing expense, net resulted primarily from higher interest expense related to our revolving credit facility as a resultmainly on account of higher variable interest rates on outstanding debt. Seesalaries, wages, and benefits.

Refer to Note 8, Debt and Borrowings17, Segment Information, in the Notes to Consolidated Financial Statements included in Item 1 of this Form 10-Q.

Other (Income)/Expense, net

Other (income)/expense, net totaled $3.9 million of income for the six months ended December 31, 2017, an increase of $2.0 million from $1.9 million of income in the prior year period. Included in other (income)/expense, net were net unrealized foreign currency gains, which were higher in the current period than the prior year period principally due to the effect of foreign currency movements on the remeasurement of foreign currency denominated loans.

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


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Income before income taxes and equity in the net income of our equity-method investees for the six months ended December 31, 2017 and 2016 was $58.8 million and $46.8 million, respectively. The increase was due to the items discussed above.

Income Taxes

The provision for income taxes includes federal, foreign, state and local income taxes. Our income tax benefit was $7.9 million for the six months ended December 31, 2017 compared to $11.3 million of tax expense in the prior year period.

Our effective income tax rate was (13.4)% and 24.1% of pre-tax income for the six months ended December 31, 2017 and 2016, respectively. The effective rate for the six months ended December 31, 2017 was primarily impacted by the enactment of the Act on December 22, 2017. The Act significantly revised the U.S. corporate income tax regime by lowering the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, repealing the deduction for domestic production activities, imposing additional limitations on the deductibility of executive officers’ compensation, implementing a territorial tax system, and imposing a transition tax on deemed repatriated earnings of foreign subsidiaries. For an additional discussion on the impact of the Act, see above under the Comparison of Three Months Ended December 31, 2017 to Three Months Ended December 31, 2016, as well as Note 9, Income Taxes, in the Notes to the Consolidated Financial Statements included in Item 1 of this Form 10-Q.

The effective tax rate for the six months ended December 31, 2016 was favorable as compared to the statutory rate as a result of the geographical mix of earnings. The effective tax rate for the six months ended December 31, 2016 was favorably impacted by the geographical mix of earnings and a reduction in the statutory tax rate in the United Kingdom enacted in the first quarter of 2017. Our effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

Equity in Net Income of Equity-Method Investees

Our equity in net income from our equity-method investments for the six months ended December 31, 2017 was flat year over year. See Note 12, Investments and Joint Ventures, in the Notes to Consolidated Financial Statements included inPart I, Item 1 of this Form 10-Q.


Net Income

Net income for the six months ended December 31, 2017 and 2016 was $66.9 million and $35.8 million, respectively, or $0.64 and $0.34 per diluted share, respectively. The increase was attributable to the factors noted above.

Adjusted EBITDA

Our Adjusted EBITDA was $142.2 million and $115.1 million for the six months ended December 31, 2017 and 2016, 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.

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Segment Results

The following table provides a summary of net sales and operating income by reportable segment for the six months ended December 31, 2017 and 2016:
(dollars in thousands) United States United Kingdom Hain Pure Protein Rest of World Corporate and Other Consolidated
Net sales            
Six months ended 12/31/17 $533,962
 $460,646
 $278,029
 $210,843
 $—
 $1,483,480
Six months ended 12/31/16 532,872
 432,463
 269,648
 186,480
 —
 1,421,463
$ change $1,090
 $28,183
 $8,381
 $24,363
 n/a
 $62,017
% change 0.2 % 6.5% 3.1% 13.1% n/a
 4.4%
             
Operating income (loss)            
Six months ended 12/31/17 $42,722
 $23,199
 $7,570
 $19,532
 $(25,247) $67,776
Six months ended 12/31/16 58,722
 17,140
 2,523
 12,532
 (35,766) 55,151
$ change $(16,000) $6,059
 $5,047
 $7,000
 $10,519
 $12,625
% change (27.2)% 35.4% 200.0% 55.9% 29.4% 22.9%
             
Operating income margin            
Six months ended 12/31/17 8.0 % 5.0% 2.7% 9.3% n/a
 4.6%
Six months ended 12/31/16 11.0 % 4.0% 0.9% 6.7% n/a
 3.9%

United States

Our net sales in the United States segment for the six months ended December 31, 2017 were $534.0 million, an increase of $1.1 million, or 0.2%, from net sales of $532.9 million for the six months ended December 31, 2016. The increase in net sales was driven by growth in our Better-for-You-Baby, Pure Personal Care and Tea platforms, partially offset by declines in our Better-for-You-Snacks, Fresh Living and Better-for-You-Pantry platforms. In addition, the declines were driven by the strategic decision to no longer support certain lower margin SKUs in order to reduce complexity and increase gross margins as the Company continues its focus on its top fifty SKUs in the United States. Net sales in the prior year period were negatively impacted by a realignment of customer inventories at certain distributor customers. Operating income in the United States for the six months ended December 31, 2017 was $42.7 million, a decrease of $16.0 million from operating income of $58.7 million for the six months ended December 31, 2016. The decrease in operating income was the result of higher marketing investment, increased freight and commodity costs, unfavorable mix and costs associated with the closure of one of our manufacturing facilities in the United States. Additionally, operating income in the prior year period was negatively impacted by changes related to the initiation of the stock keeping unit rationalization.

United Kingdom

Our net sales in the United Kingdom segment for the six months ended December 31, 2017 were $460.6 million, an increase of $28.2 million, or 6.5%, from net sales of $432.5 million for the six months ended December 31, 2016. On a constant currency basis, net sales increased 3.1% from the prior year. The net sales increase was primarily due to growth from our Tilda®, Ella’s Kitchen®, Hartley’s® and Linda McCartney’s® brands. Also contributing to the increase in net sales was the aforementioned price realization, as well as the acquisitions of The Yorkshire Provender Limited and Clarks UK Limited, both which occurred subsequent to December 31, 2016. Operating income in the United Kingdom segment for the six months ended December 31, 2017 was $23.2 million, an increase of $6.1 million from $17.1 million for the six months ended December 31, 2016. The increase in operating income was primarily due to the aforementioned increase in sales, as well as operating efficiencies achieved at Hain Daniels, offset in part by restructuring costs incurred at Tilda.

Hain Pure Protein


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Our net sales in the Hain Pure Protein segment for the six months ended December 31, 2017 were $278.0 million, an increase of $8.4 million, or 3.1%, from net sales of $269.6 million for the six months ended December 31, 2016. The increase in net sales was primarily due to growth of our FreeBird® and Plainville Farms® brands, partially offset by a decrease in sales in private label sales. Operating income in the segment for the six months ended December 31, 2017 was $7.6 million, an increase of $5.0 million, from $2.5 million for the six months ended December 31, 2016. The increase in operating income was primarily due to the aforementioned increase in net sales and lower conversion costs as a result of production improvements across the business.

Rest of World

Our net sales in Rest of World were $210.8 million for the six months ended December 31, 2017, an increase of $24.4 million, or 13.1%, from net sales of $186.5 million for the six months ended December 31, 2016. On a constant currency basis, net sales increased 7.5% from the prior year. The increase in net sales was primarily due to increased sales volume in Europe related to our branded business in grocery and health food channels and private label plant-based beverage business, as well as increased sales in Canada driven by growth in our Sensible Portions®, Yves® and Live Clean® brands, as well as increased private label sales.Operating income in the segment for the six months ended December 31, 2017 was $19.5 million, an increase of $7.0 million, from $12.5 million for the six months ended December 31, 2016. The increase in operating income was primarily due to the aforementioned increase in sales as well as operating efficiencies achieved at our plant-based manufacturing facilities in Europe.

Corporate and Other

Our Corporate and Other category consists of expenses related to the Company’s centralized administrative functions, which do not specifically relate to an operating segment. Such Corporate and Other expenses are comprised mainly of the compensation and related expenses of certain of the Company’s senior executive officers and other employees who perform duties related to our entire enterprise, as well as expenses for certain professional fees, facilities, and other items which benefit the Company as a whole. Additionally, accounting review and remediation costs, net of insurance proceeds and acquisition related expenses, restructuring and integration charges are included in Corporate and Other and were $6.3 million and $13.5 million for the six months ended December 31, 2017 and 2016, respectively.

Refer to Note 15, Segment Information, in the Notes to Consolidated Financial Statements included in 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 and borrowing capacity under our Credit Agreement will be adequate to meet anticipated operating and other expenditures for the foreseeable future.

On December 22, 2021, the Company refinanced its revolving credit agreement.facility by entering into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for senior secured financing of $1,100.0 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 is 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.


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

Our cash and cash equivalents balance decreased $7.8$13.7 million at December 31, 2017September 30, 2022 to $139.2$51.8 million as compared to $147.0$65.5 million at June 30, 2017.2022. Our working capital was $578.2$336.4 million at December 31, 2017,September 30, 2022, an increase of $43.9$7.4 million from $534.3$329.0 million at the end of fiscal 2017.2022. Additionally, our total debt increased by $10.1 million at September 30, 2022 to $898.8 million as compared to $888.6 million at June 30, 2022 as a result of increased net borrowings to manage working capital. As of September 30, 2022, $188.2 million was available under the Credit Agreement as compared to $204.0 million available as of June 30, 2022. The Company was in compliance with all covenants at September 30, 2022.


Liquidity is affected by many factors, some of which are based on normal ongoing operations of the Company’s business and some of which arise from fluctuations related to global economics and markets. Our cash balances are held in the United States, United Kingdom, Canada, Europe, Middle East, and India. As of December 31, 2017, approximately 72.6% ($101.1 million)September 30, 2022, substantially all of the total cash balance from operations was held outside of the United States. It is our current intent to indefinitely reinvest our foreign earnings outside the United States. However, we do intend to further study changes enacted by the Tax Cuts and Jobs Act, costs of repatriation and the current and future cash needs of foreign operations to determine whether there is an opportunity to repatriate foreign cash balances in the future on a tax-efficient basis.





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We maintain our cash and cash equivalents primarily in money market funds or their equivalent. As of December 31, 2017,September 30, 2022, all of our investments were expected to mature in less than three months. Accordingly, we do not believe that our investments have significant exposure to interest rate risk. Cash provided by (used in) operating, investing, and financing activities is summarized below.

Six Months Ended December 31, Change inThree Months Ended September 30,Change in
(amounts in thousands)2017 2016 Dollars Percentage(amounts in thousands)20222021Dollars
Cash flows provided by (used in):       
Cash flows (used in) provided by:Cash flows (used in) provided by:
Operating activities$25,426
 $116,127
 $(90,701) (78.1)%Operating activities$(5,116)$37,586 $(42,702)
Investing activities(44,091) (22,306) (21,785) (97.7)%Investing activities(6,928)(18,054)11,126 
Financing activities7,124
 (58,622) 65,746
 112.2 %Financing activities9,824 (63,515)73,339 
Effect of exchange rate changes on cash3,765
 (6,000) 9,765
 162.8 %
Net (decrease) increase in cash$(7,776) $29,199
 $(36,975) (126.6)%
Decrease in cash and cash equivalentsDecrease in cash and cash equivalents(2,220)(43,983)41,763 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(11,498)(2,926)(8,572)
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents$(13,718)$(46,909)$33,191 


Cash provided byused in operating activities was $25.4$5.1 million for the sixthree months ended December 31, 2017,September 30, 2022, a decrease of $90.7$42.7 million from the $116.1 million of cash provided by operating activities forof $37.6 million in the six months ended December 31, 2016.prior year period. This decrease versus the prior year period resulted primarily from an additional $102.9lower cash generation of $31.4 million of cash used withinfrom our working capital accounts primarily relatedwhich was mainly due to higher inventory balance and lower accounts receivablepayable and other current assets, partially offset by an increasereduction of $12.2$11.4 million in net income adjusted for non-cash charges.charges in the current period.


Cash used in investing activities was $44.1$6.9 million for the sixthree months ended December 31, 2017, an increaseSeptember 30, 2022, a decrease of $21.8$11.1 million from the $22.3 million of cash used in investing activities for the six months ended December 31, 2016. The increase resulted primarily from a $13.1 million payment for the acquisition of Clarks UK Limited, net of cash acquired, and an increase of $2.3$18.1 million in the prior year period primarily due to lower capital expenditures. During the six months ended December 31, 2016, we generated $5.4 million in connection with the sale of our own-label juice business in the United Kingdom. There were no comparable investing activitiesexpenditure in the current period.period due to phasing of capital projects. During the three months ended September 30, 2022, $7.2 million of capital expenditures were incurred on account of capital projects primarily related to the United States and the United Kingdom operating segments.


Cash provided by financing activities was $7.1$9.8 million for the sixthree months ended December 31, 2017,September 30, 2022, an increase in cash provided of $65.7$73.3 million from the $58.6compared to $63.5 million of net cash used in the prior year period. The increase in cash provided by financing activities forwas primarily due to no share repurchases under our repurchase program during the sixthree months ended December 31, 2016. The increase was due to net repayments of $48.2 million on our revolving credit facility and other debt for the six months ended December 31, 2016, compared with net borrowings of $13.8 million for the six months ended December 31, 2017, which was primarily used to fund advanced rice purchases at Tilda and to fund capital expenditures within our Europe business. Additionally, included in the six months ended December 31, 2017 was $6.7 million related to stock repurchases to satisfy employee payroll tax withholdings. Included in the six months ended December 31, 2016 was $7.9 million related to stock repurchases to satisfy employee payroll tax withholdings, as well as $2.5 million in acquisition-related contingent consideration.September 30, 2022.


Operating Free Cash FlowFlows


Our operating free cash flow wasflows were negative $5.6$12.3 million for the sixthree months ended December 31, 2017,September 30, 2022, a decrease of $93.0$32.1 million from $19.8 million in the sixthree months ended December 31, 2016.September 30, 2021. This decrease versus the prior year period resulted primarily from $102.9a decrease in cash flows from operations of $42.7 million of more cash used within working capital accounts,driven by the reasons explained above. The decrease was partially offset by an increase of $12.2$10.6 million adjusted fordue to lower property, plant and equipment purchases in the impact of non-cash charges. We expect that our capital spending for fiscal 2018 will be approximately $75 million, and we may incur additional costs in connection with Project Terra. We refer the reader to thecurrent period. 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 operating free cash flow.flows.


Credit AgreementShare Repurchase Program


On December 12, 2014, we entered intoIn January 2022, the Second AmendedCompany’s Board of Directors authorized the repurchase of up to $200.0 million of the Company’s issued and Restated Credit Agreement (the “Credit Agreement”) which provides us with a $1.0 billion revolving credit facility whichoutstanding common stock. Repurchases may be increased by an additional uncommitted $350.0 million provided certain conditions are met. The Credit Agreement expires in December 2019. Loans under the Credit Agreement bear interest at a Base Rate or a Eurocurrency Rate (both of which are definedmade from time to time in the Credit Agreement) plus an applicable margin,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 is determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement. Borrowings may be used to provide working capital, finance capital expendituresCompany repurchases its shares and permitted acquisitions, refinance certain existing indebtedness and for other general corporate purposes. Asthe timing of December 31, 2017 and June 30, 2017, there were $735.1 million and $733.7

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million of borrowings outstanding, respectively, under the Credit Agreement. The weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2017 was 3.00%.

The Credit Agreement is guaranteed by substantially all of our current and future direct and indirect domestic subsidiaries. We are required by the terms of the Credit Agreement to comply with financialsuch repurchases will depend upon market conditions and other customary affirmative and negative covenants for facilities of this nature. As of December 31, 2017 and June 30, 2017, the Company was in compliance with all associated covenants.

Our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 includes a table summarizing our contractual obligations of approximately $1.3 billion as of June 30, 2017, including approximately $793.8 million for long-term debt obligations, including projected future interest. That table appears under Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the report. On February 6, 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement provides for the extension of our existing $1.0 billion unsecured revolving credit facility through February 6, 2023, and provides for an additional $300.0 million term loan. Under the Amended Credit Agreement, the credit facility may be increased by an additional uncommitted $400.0 million, provided certain conditions are met. The financial covenants, interest rates, and general terms and conditions of both the unsecured revolving credit facility and term loan under the Amended Credit Agreement are substantially the same as our existing Credit Agreement.

The term loan is payable on the last day of each fiscal quarter commencing June 30, 2018 in an amount equal to $3.8 million and can be prepaid in whole or in part without premium or penalty.

Tilda Short-Term Borrowing Arrangements

Tilda maintains short-term borrowing arrangements primarily used to fund the purchase of rice from India and other countries.  The maximum borrowings permitted under all such arrangements are £52.0 million.  Outstanding borrowings are collateralized by the current assets of Tilda, typically have six-month terms and bear interest at variable rates typically based on LIBOR plus a margin (weighted average interest rate of approximately 3.20% at December 31, 2017).

Other Borrowings

Other borrowings primarily relate to a cash pool facility in Europe. The cash pool facility provides our Europe operating segment with sufficient liquidity to support the Company’s growth objectives within this segment. The maximum borrowings permitted under the cash pool arrangement are €12.5 million. Outstanding borrowings bear interest at variable rates typically based on EURIBOR plus a margin of 1.10% (weighted average interest rate of approximately 1.10% at December 31, 2017).

corporate considerations. During the three months ended December 31, 2017, our Tilda Hain Indian subsidiary entered into an uncommitted revolving credit facility to fund its working capital needs. The maximum borrowing permittedSeptember 30, 2022, the Company repurchased no shares under the arrangement are $4 million. There were no amounts outstanding at December 31, 2017.repurchase program. As of September 30, 2022, the Company had $173.5 million of remaining authorization under the share repurchase program.

We believe that our cash on hand of $139.2 million at December 31, 2017, as well as projected cash flows from operations and availability under our Credit Agreement, are sufficient to fund our working capital needs in the ordinary course of business, anticipated fiscal 2018 capital expenditures of approximately $75 million and other expected cash requirements for at least the next twelve months.


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
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Board of Directors believesbelieve the non-U.S. GAAP measure provides useful information to investors and any additional purposes for which our management and Board of Directors usesuse 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.
Net Sales - Constant Currency Presentation
We believe that this measurenet sales adjusted for the impact of foreign currency provides useful information to investors because it provides transparency to underlying performance in our consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility in foreign currency exchange markets. To present this informationnet sales adjusted for historical periods,the impact of foreign currency, current

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period net sales for entities reporting in currencies other than the U.S. dollarDollar are translated into U.S. dollarsDollars 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. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.


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

We also exclude the impact of acquisitions, 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 acquisitions, 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 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 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 and constant currency net sales growthand net sales adjusted for the impact of foreign currency, acquisitions, divestitures and discontinued brands is as follows:

(amounts in thousands)United Kingdom Rest of World Hain Consolidated
Net sales - Three months ended 12/31/2017$238,201
 $107,728
 $775,204
Impact of foreign currency exchange(14,987) (6,161) (21,148)
Net sales on a constant currency basis - Three months ended 12/31/2017$223,214
 $101,567
 $754,056
      
Net sales - Three months ended 12/31/2016$212,312
 $96,068
 $739,999
Net sales growth on a constant currency5.1% 5.7% 1.9%
      
Net sales - Six months ended 12/31/2017$460,646
 $210,843
 $1,483,480
Impact of foreign currency exchange(14,954) (10,338) (25,292)
Net sales on a constant currency basis - Six months ended 12/31/2017$445,692
 $200,505
 $1,458,188
      
Net sales - Six months ended 12/31/2016$432,463
 $186,480
 $1,421,463
Net sales growth on a constant currency3.1% 7.5% 2.6%
(amounts in thousands)North AmericaInternationalHain Consolidated
Net sales - Three months ended September 30, 2022$288,396 $150,955 $439,351 
Acquisitions, divestitures, and discontinued brands(16,006)— (16,006)
Impact of foreign currency exchange1,068 25,786 26,854 
Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands - Three months ended September 30, 2022$273,458 $176,741 $450,199 
Net sales - Three months ended September 30, 2021$265,525 $189,378 $454,903 
Divestitures and discontinued brands(949)— (949)
Net sales adjusted for divestitures and discontinued brands - Three months ended September 30, 2021$264,576 $189,378 $453,954 
Net sales growth (decline)8.6 %(20.3)%(3.4)%
Impact of acquisitions, divestitures, and discontinued brands(5.6)%— %(3.3)%
Impact of foreign currency exchange0.4 %13.6 %5.9 %
Net sales growth (decline) on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands3.4 %(6.7)%(0.8)%


Adjusted EBITDA


Adjusted EBITDA is defined as net income before income taxes, net interest expense, income taxes, depreciation and amortization, impairment of long-lived assets, equity in the earningsnet loss (income) of equity-method investees, stock-based compensation, acquisitionnet, unrealized currency gains and losses, litigation and related expenses, including integrationcosts, plant closure related costs, net, productivity and restructuring charges,transformation costs, warehouse and manufacturing
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consolidation and other non-recurring items.costs, costs associated with acquisitions, divestitures and other transactions, gains or losses on sales of assets and businesses, inventory write-downs, impairment of long-lived assets and intangibles 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.









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A reconciliation of net income to Adjusted EBITDA is as follows:
Three Months Ended September 30,
(amounts in thousands)20222021
Net income$6,923 $19,411 
Depreciation and amortization11,970 10,855 
Equity in net loss of equity-method investees382 526 
Interest expense, net7,279 1,146 
Provision for income taxes2,631 4,542 
Stock-based compensation, net3,994 4,287 
Unrealized currency gains(1,711)(1,023)
Litigation and related costs
Litigation expenses2,463 1,956 
Proceeds from insurance claim— (196)
Restructuring activities
Plant closure related costs, net(2)996 
Productivity and transformation costs773 3,204 
Warehouse/manufacturing consolidation and other costs— 2,289 
Acquisitions, divestitures and other
Transaction and integration costs, net1,367 (231)
Gain on sale of assets(40)(446)
Adjusted EBITDA$36,029 $47,316 
Adjusted EBITDA - Constant Currency Presentation

We believe that this measure provides useful information to investors because it provides transparency to underlying performance in adjusted EBITDA by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility in foreign currency exchange markets. To present this information for historical periods, current period adjusted EBITDA 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. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

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 Three Months Ended December 31, Six Months Ended December 31,
(amounts in thousands)2017 2016 2017 2016
Net income$47,103
 $27,185
 $66,949
 $35,789
(Benefit)/provision for income taxes(16,369) 10,509
 (7,899) 11,271
Interest expense, net5,827
 4,426
 11,447
 8,780
Depreciation and amortization17,346
 16,948
 34,972
 34,168
Equity in net income of equity-method investees(194) (38) (205) (222)
Stock-based compensation expense4,158
 2,531
 7,322
 5,235
Long-lived asset impairment3,449
 —
 3,449
 —
Unrealized currency gains(287) (1,984) (3,706) (3,277)
EBITDA61,033
 59,577
 112,329
 91,744
        
Acquisition related expenses, restructuring and integration charges, and other


4,797
 108
 10,643
 1,516
Accounting review and remediation costs, net of insurance proceeds4,451
 7,005
 3,093
 12,966
Losses on terminated chilled desserts contract2,142
 —
 3,614
 —
U.K. and Hain Pure Protein start-up costs2,381
 —
 3,464
 —
Discontinuation of Round Hill Brand2,177
 —
 2,177
 —
Hain Pure Protein network distribution redesign1,952
 —
 1,952
 —
Co-packer disruption1,567
 —
 2,740
 —
Regulated packaging change1,007
 —
 1,007
 —
Plant closure related costs700
 1,804
 700
 1,804
Hain Pure Protein feed formulation test471
 —
 471
 —
SKU rationalization—
 160
 —
 5,359
U.K. deferred synergies due to CMA Board decision—
 447
 —
 918
Recall and other related costs—
 397
 —
 809
Adjusted EBITDA$82,678
 $69,498
 $142,190
 $115,116
A reconciliation between adjusted EBITDA and constant currency adjusted EBITDA is as follows:

(amounts in thousands)Hain Consolidated
Adjusted EBITDA - Three months ended September 30, 2022$36,029 
Impact of foreign currency exchange2,619 
Adjusted EBITDA on a constant currency basis - Three months ended September 30, 2022$38,648 
Adjusted EBITDA - Three months ended September 30, 2021$47,316 

Operating Free Cash FlowFlows


In our internal evaluations, we use the non-U.S. GAAP financial measure “operating free cash flow.“Operating Free Cash Flows.” The difference between operating free cash flowOperating Free Cash Flows from continuing operations and cash flowflows provided by or used in operating activities, which is the most comparable U.S. GAAP financial measure, is that operating free cash flowOperating Free Cash Flows reflects the impact of capital expenditures.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 provided by or used in operating activities. We view operating free cash flowOperating Free Cash Flows as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider operating free cash flowOperating Free Cash Flows in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP.


A reconciliation from Cash flowcash flows (used in) provided by operating activities to Operating free cash flowFree Cash Flows is as follows:
Three Months Ended September 30,
(amounts in thousands)20222021
Net cash (used in) provided by operating activities$(5,116)$37,586 
Purchases of property, plant and equipment(7,215)(17,810)
Operating free cash flows$(12,331)$19,776 

 Six Months Ended December 31,
(amounts in thousands)2017 2016
Cash flow provided by operating activities$25,426
 $116,127
Purchase of property, plant and equipment(31,027) (28,725)
Operating free cash flow$(5,601) $87,402
We believe that our cash on hand of $51.8 million at September 30, 2022 as well as projected cash flows from operations and availability under our Credit Agreement are sufficient to fund our working capital needs in the ordinary course of business, anticipated fiscal 2023 capital expenditures and other expected cash requirements for at least the next 12 months.


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Off Balance Sheet Arrangements

At December 31, 2017, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K that have had, or are likely to have, a material current or future effect on our consolidated financial statements.

Critical Accounting Estimates


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 revenue recognition, trade promotions and sales incentives,variable consideration, valuation of accounts and chargebackschargeback receivable, accounting for acquisitions, valuation of long-lived assets, goodwill and intangible assets, stock basedstock-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, 2017.2022, from which there have been no material changes.


Recent Accounting Pronouncements


Refer to Note 2, BasisThere were no recently adopted accounting pronouncements or recently issued accounting pronouncements not yet effective that the Company believes will have a significant impact on its consolidated financial statements.

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Table of Presentation, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.Contents

Seasonality


Certain of our product lines have seasonal fluctuations. Hot tea, baking products, hot cereal, hot-eating desserts and soup sales are stronger in colder months, while sales of snack foods, sunscreen and certain of our prepared food and personal care products are stronger in the warmer months. Additionally, with our acquisitions of HPPC, Empire and Tilda, our net sales and earnings may further fluctuate based on the timing of holidays throughout the year. 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.


Item 3.         Quantitative and Qualitative Disclosures About Market Risk


There have been no significant changes in market risk for the three and six months ended December 31, 2017 from those addressed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017.2022 during the three months ended September 30, 2022. 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, 2017.

2022.
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Item 4.        Controls and 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 intended 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 Securities and Exchange Commission’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, although the Company continues to work to remediate the material weaknesses in internal control over financial reporting as described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and significant progress has been made to date, our CEO and CFO have concluded that the disclosure controls and procedures related to these material weaknessesfor the Company were not effective as of December 31, 2017.September 30, 2022.

Consistent with guidance issued by the Securities Exchange Commission that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management has excluded an assessment of such controls of Clarks UK Limited (“Clarks”) acquired by the Company on December 1, 2017, from its evaluation of the effectiveness of the Company’s disclosure controls and procedures. Clarks represented less than one percent of total assets, net assets, revenues and net income, respectively, as of December 31, 2017.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect every misstatement. An evaluation of effectiveness is subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may decrease over time.


Changes in Internal ControlsControl Over Financial Reporting

Under applicable SEC rules (Exchange Act Rules 13a-15(c) and 15d-15(c)), management is required to evaluate any changeThere were no changes in our internal controlcontrols over financial reporting that occurred during each fiscal quarter that had materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As explained in greater detail under Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017, we undertook a broad range of remedial procedures prior to February 7, 2018, the filing date of this report, to address the material weaknesses in our internal control over financial reporting identified as of June 30, 2017. Our efforts to improve our internal controls are ongoing and focused on organizational enhancements, information technology general controls and IT dependent controls, revenue practices and training practices. Therefore, while we determined, with the participation of our CEO and CFO, that there have been no changes in our internal control over financial reporting in the three months ended December 31, 2017September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, we continue to monitor the operation of these remedial measures through the date of this report.reporting.
For a more comprehensive discussion of the material weaknesses in internal control over financial reporting identified by management as of June 30, 2017, and the remedial measures undertaken to address these material weaknesses, investors are encouraged to review Item 9A, Controls and Procedures, in our Annual Report on Form 10-K for the year ended June 30, 2017.




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PART II - OTHER INFORMATION

Item 1.Legal Proceedings


Securities Class Actions Filed in Federal Court

On August 17, 2016, three securities class action complaints were filedThe information called for by this item is incorporated herein by reference to Note 16, Commitments and Contingencies, in the Eastern District of New York against the Company alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The three complaints are: (1) Flora v. The Hain Celestial Group, Inc., et al., (the “Flora Complaint”); (2) Lynn v. The Hain Celestial Group, Inc., et al. (the “Lynn Complaint”); and (3) Spadola v. The Hain Celestial Group, Inc., et al. (the “Spadola Complaint” and, together with the Flora and Lynn Complaints, the “Securities Complaints”).  On June 5, 2017, the court issued an order for consolidation, appointment of Co-Lead Plaintiffs and approval of selection of co-lead counsel.  PursuantNotes to this order, the Securities Complaints were consolidated under the caption In re The Hain Celestial Group, Inc. Securities Litigation (the “Consolidated Securities Action”), and Rosewood Funeral Home and Salamon Gimpel were appointed as Co-Lead Plaintiffs.  On June 21, 2017, the Company received notice that plaintiff Spadola voluntarily dismissed his claims without prejudice to his ability to participate in the Consolidated Securities Action as an absent class member.  The Co-Lead PlaintiffsFinancial Statements included in the Consolidated Securities Action filed a Consolidated Amended Complaint on August 4, 2017 and a Corrected Consolidated Amended Complaint on September 7, 2017 on behalfPart I, Item 1 of a purported class consisting of all persons who purchased or otherwise acquired Hain Celestial securities between November 5, 2013 and February 10, 2017 (the “Amended Complaint”).  The Amended Complaint names as defendants the Company and certain of its current and former officers (collectively, the “Defendants”) and asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls.  Defendants filed a motion to dismiss on October 3, 2017. Co-Lead Plaintiffs filed an opposition on December 1, 2017, and Defendants filed the reply on January 16, 2018. The motion to dismiss is pending before the Court.this Form 10-Q.


Stockholder Derivative Complaints Filed in State Court

On September 16, 2016, a stockholder derivative complaint, Paperny v. Heyer, et al. (the “Paperny Complaint”), was filed in New York State Supreme Court in Nassau County against the Board of Directors and certain officers of the Company alleging breach of fiduciary duty, unjust enrichment, lack of oversight and corporate waste.  On December 2, 2016 and December 29, 2016, two additional stockholder derivative complaints were filed in New York State Supreme Court in Nassau County against the Board of Directors and certain officers under the captions Scarola v. Simon (the “Scarola Complaint”) and Shakir v. Simon (the “Shakir Complaint” and, together with the Paperny Complaint and the Scarola Complaint, the “Derivative Complaints”), respectively.  Both the Scarola Complaint and the Shakir Complaint allege breach of fiduciary duty, lack of oversight and unjust enrichment.  On February 16, 2017, the parties for the Derivative Complaints entered into a stipulation consolidating the matters under the caption In re The Hain Celestial Group (the “Consolidated Derivative Action”) in New York State Supreme Court in Nassau County, ordering the Shakir Complaint as the operative complaint. On November 2, 2017, the parties agreed to stay the Consolidated Derivative Action until April 11, 2018.

Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court

On April 19, 2017 and April 26, 2017, two class action and stockholder derivative complaints were filed in the Eastern District of New York against the Board of Directors and certain officers of the Company under the captions Silva v. Simon, et al. (the “Silva Complaint”) and Barnes v. Simon, et al. (the “Barnes Complaint”), respectively.  Both the Silva Complaint and the Barnes Complaint allege violation of securities law, breach of fiduciary duty, waste of corporate assets and unjust enrichment.

On May 23, 2017, an additional stockholder filed a complaint under seal in the Eastern District of New York against the Board of Directors and certain officers of the Company.  The complaint alleges that the Company’s directors and certain officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results.  The complaint also alleges that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and includes claims for breach of fiduciary duty, unjust enrichment and corporate waste.  On August 9, 2017, the Court granted an order to unseal this case and reveal Gary Merenstein as the plaintiff.

On August 10, 2017, the court granted the parties stipulation to consolidate the Barnes Compliant, the Silva Complaint and the Merenstein Compliant under the caption In re The Hain Celestial Group, Inc. Stockholder Class and Derivative Litigation (the “Consolidated Stockholder Class and Derivative Action”) and to appoint Robbins Arroyo LLP and Scott+Scott as Co-Lead Counsel, with the Law Offices of Thomas G. Amon as Liaison Counsel for Plaintiffs.   On September 14, 2017, a related complaint was filed under the caption Oliver v. Berke, et al. (the “Oliver Complaint”), and on October 6, 2017, the Oliver Complaint was consolidated with the Consolidated Stockholder Class and Derivative Action. The Plaintiffs filed their consolidated amended

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complaint under seal on October 26, 2017. On December 20, 2017, the parties agreed to stay Defendants’ time to answer, move, or otherwise respond to the consolidated amended complaint through and including 30 days after a decision is rendered on the motion to dismiss the Amended Complaint in the consolidated Securities Class Actions, described above.

SEC Investigation

As previously disclosed, the Company voluntarily contacted the SEC in August 2016 to advise it of the Company’s delay in the filing of its periodic reports and the performance of the independent review conducted by the Audit Committee.  The Company has continued to provide information to the SEC on an ongoing basis, including, among other things, the results of the independent review of the Audit Committee as well as other information pertaining to its internal accounting review relating to revenue recognition. The SEC has issued subpoenas to the Company relevant to its investigation.  The Company is in the process of responding to the SEC’s requests for information and intends to cooperate fully with the SEC.

Other

In addition to the litigation described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business. While the results of litigation and claims cannot be predicted with certainty, the Company believes the reasonably possible losses of such matters, individually and in the aggregate, are not material. Additionally, the Company believes the probable final outcome of such matters will not have a material adverse effect on the Company’s consolidated results of operations, financial position, cash flows or liquidity.

Item 1A.Risk Factors


WeThere have disclosedbeen no material changes from the riskdiscussion of the material factors affecting our business, results of operations and financial conditionthat make an investment in the Company speculative or risky contained in the section entitled “Risk Factors”"Risk Factors" in ourthe Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2017,2022, filed with the SEC on September 13, 2017. There have been no material changes from the risk factors previously disclosed.August 25, 2022.



Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds


Issuer Purchases of Equity Securities


The table below sets forth information regarding repurchases by the Company of its common stock during the periods indicated.

Period
(a)
Total number
of shares
purchased (1)
 
(b)
Average
price paid
per share
 
(c)
Total number of
shares purchased
as part of
publicly
announced plans
 
(d)
Maximum
number of shares
that may yet be
purchased under
the plans (in millions of dollars) (2)
October 1, 2017 - October 31, 201722,444
 $37.06
 —
 250
November 1, 2017 - November 30, 201763,981
 40.89
 —
 250
December 1, 2017 - December 31, 201727,814
 40.98
 —
 250
Total114,239
 $40.16
 —
 —
Period(a)
Total number
of shares
purchased (1)
(b)
Average
price paid
per share
(c)
Total number of
shares purchased
as part of
publicly
announced plans		(d)
Maximum
number of shares
that may yet be
purchased under
the plans (in millions of dollars) (2)
July 1, 2022 - July 31, 2022— $— — $173.5 
August 1, 2022 - August 31, 2022(9,445)24.11 — 173.5 
September 1, 2022 - September 30, 2022(120)19.99 — 173.5 
Total(9,565)$24.06 — 


(1)Shares surrendered for payment of employee payroll taxes due on shares issued under stockholder-approved stock-based compensation plans.

(1) Includes shares surrendered for payment of employee payroll taxes due on shares issued under stock-based compensation plans.
(2)On June 21, 2017, the Company’s
(2) In January 2022, the Company's Board of Directors authorized the repurchase of up to $250 million of the Company’s issued and outstanding common stock. Repurchases may be made from time to time in the open market, pursuant to preset trading plans, in private transactions or otherwise. The authorization does not have a stated expiration date.

Item 5.        Other Information

As previously disclosed in the Company’s Current Report on Form 8-K, filed with the SEC on November 21, 2017, at the Company’s 2017 Annual Meeting of Stockholders, stockholders approved amendments to the Company’s Amended and Restated By-Laws (as amended, the “By-Laws”) to implement “proxy access.” The proxy access amendments enable a stockholder, or a group of up to 20 stockholders, that has owned 3% or more$200 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 authorization does not have a stated expiration date. The extent to which the Company repurchases its shares continuously for at least three years to include director

and the timing of such repurchases will depend upon market conditions, and other corporate considerations. During the quarter ended September 30, 2022, the Company did not repurchase any shares under the repurchase program. As of September 30, 2022, the Company had $174 million of remaining authorization under the share repurchase program.
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nominees constituting up to the greater of two nominees or 20% of the Board of Directors in the Company’s proxy materials, subject to the other terms and conditions of the By-Laws.

The foregoing summary of the amendments to the By-Laws is qualified in its entirety by reference to the full text of the By-Laws, a copy of which was filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on November 21, 2017.

Item 6.        Exhibits

See Exhibit Index immediately preceding the signature page hereto, which is incorporated herein by reference.

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EXHIBIT INDEX

Exhibit
Number
Description
3.1
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of Amendment No. 1 to the Company’s Registration StatementAnnual Report on Form S-4 (Commission File No. 333-33830)10-K for the fiscal year ended June 30, 2021, filed with the CommissionSEC on April 24, 2000)August 26, 2021).

3.23.2
Certificate of Amendment to Amended and Restated Certificate of Incorporation of The Hain Celestial Group, Inc. (incorporated by reference to Exhibit 3.2(b) of the Company’s Current Report on Form 8-K filed with the Commission on November 26, 2014).
3.3
 The Hain Celestial Group, Inc. Amended and Restated By-lawsBy-Laws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the CommissionSEC on November 21, 2017)December 7, 2018).

4.1
Specimen of common stock certificate (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Company’s Registration Statement on Form S-4 filed with the SEC on April 24, 2000).
10.1*
Form of Restricted Share Unit Agreement under The Hain Celestial Group, Inc. Amended and Restated 2002 Long Term Incentive and Stock Award Plan – 2023-2025 LTIP
10.2*
Form of Performance Share Unit Agreement under The Hain Celestial Group, Inc. Amended and Restated 2002 Long Term Incentive and Stock Award Plan – 2023-2025 LTIP (Absolute Total Shareholder Return)
10.3*
Form of Performance Share Unit Agreement under The Hain Celestial Group, Inc. Amended and Restated 2002 Long Term Incentive and Stock Award Plan – 2023-2025 LTIP (Relative Total Shareholder Return)
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
32.1
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
101.INS
The following materials fromXBRL Instance Document - the Company’s Quarterly Report on Form 10-Q forinstance document does not appear in the quarter ended December 31, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i)Interactive Data File because its XBRL tags are embedded within the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statement of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Indicates management contract or compensatory plan or arrangement.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE HAIN CELESTIAL GROUP, INC.
(Registrant)
Date:November 8, 2022THE HAIN CELESTIAL GROUP, INC./s/   Mark L. Schiller
(Registrant)
Date:February 7, 2018/s/    Irwin D. Simon
Irwin D. Simon,
Chairman, Mark L. Schiller,
President and
Chief
Executive Officer
��
Date:February 7, 2018November 8, 2022/s/   James LangrockChristopher J. Bellairs
James Langrock,Christopher J. Bellairs,
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)




Date:November 8, 2022/s/   Ameet Kumar
Ameet Kumar,
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
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