UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
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.
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Accelerated filer |
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Non-accelerated filer |
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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
As of October 31, 2024, there were
THE HAIN CELESTIAL GROUP, INC.
Index
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Part I - Financial Information |
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Item 1. |
3 |
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Consolidated Balance Sheets - September 30, 2024 and June 30, 2024 |
3 |
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Consolidated Statements of Operations - Three months ended September 30, 2024 and 2023 |
4 |
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5 |
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Consolidated Statement of Stockholders’ Equity - Three months ended September 30, 2024 and 2023 |
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Consolidated Statements of Cash Flows - Three months ended September 30, 2024 and 2023 |
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9 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
29 |
Item 3. |
40 |
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Item 4. |
40 |
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Part II - Other Information |
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Items 3, and 4 are not applicable |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 5. |
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Item 6. |
42 |
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1
Forward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Form 10-Q”) contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of The 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. The words “believe,” “expect,” “anticipate,” “may,” “should,” “plan,” “intend,” “potential,” “will” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, among other things: our beliefs or expectations relating to our future performance, results of operations and financial condition; our strategic initiatives and business strategy, including statements related to Hain Reimagined; our supply chain, including the availability and pricing of raw materials; our brand portfolio; pricing actions and product performance; inflation rates; and current or future macroeconomic trends.
Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; our ability to manage our supply chain effectively; input cost inflation, including with respect to freight and other distribution costs; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; our ability to execute our cost reduction initiatives and related strategic initiatives; reliance on independent distributors; risks associated with operating internationally; the availability of organic ingredients; risks associated with outsourcing arrangements; risks associated with geopolitical conflicts or events; our ability to identify and complete acquisitions or divestitures and our level of success in integrating acquisitions; our reliance on independent certification for a number of our products; our ability to attract and retain highly skilled people; risks related to tax matters; impairments in the carrying value of goodwill or other intangible assets; the reputation of our company and our brands; our ability to use and protect trademarks; foreign currency exchange risk; general economic conditions; compliance with our credit agreement; cybersecurity incidents; disruptions to information technology systems; the impact of climate change and related disclosure regulations; liabilities, claims or regulatory change with respect to environmental matters; pending and future litigation, including litigation relating to Earth’s Best® baby food products; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; compliance with data privacy laws; the adequacy of our insurance coverage; and other risks and matters described in our most recent Annual Report on Form 10-K, this Form 10-Q and 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.
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 2024 AND JUNE 30, 2024
(In thousands, except par values)
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September 30, |
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June 30, |
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2024 |
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2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowance for doubtful accounts of $ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Goodwill |
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Trademarks and other intangible assets, net |
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Investments and joint ventures |
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Operating lease right-of-use assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, less current portion |
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Deferred income taxes |
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Operating lease liabilities, noncurrent portion |
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Other noncurrent liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock - $ |
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Common stock - $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Less: Treasury stock, at cost, |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See notes to consolidated financial statements.
3
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED September 30, 2024 AND 2023
(In thousands, except per share amounts)
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Three Months Ended September 30, |
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2024 |
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2023 |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Productivity and transformation costs |
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Amortization of acquired intangible assets |
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Long-lived asset impairment |
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Operating income (loss) |
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Interest and other financing expense, net |
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Other expense (income), net |
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Loss before income taxes and equity in net loss of equity-method investees |
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Provision (benefit) for income taxes |
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Equity in net loss of equity-method investees |
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Net loss |
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$ |
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$ |
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Net loss per common share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Shares used in the calculation of net loss per common share: |
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Basic |
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Diluted |
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See notes to consolidated financial statements.
4
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
FOR THE THREE MONTHS ENDED September 30, 2024 AND 2023
(In thousands)
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Three Months Ended |
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September 30, 2024 |
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September 30, 2023 |
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Pretax |
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Tax |
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After tax |
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Pretax |
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Tax |
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After tax |
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Net loss |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments before reclassifications |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Change in deferred (losses) gains on cash flow hedging instruments |
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Change in deferred gains (losses) on fair value hedging instruments |
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( |
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( |
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Change in deferred (losses) gains on net investment hedging instruments |
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( |
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( |
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( |
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Total other comprehensive income (loss) |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Total comprehensive income (loss) |
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$ |
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$ |
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See notes to consolidated financial statements.
5
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED September 30, 2024
(In thousands, except par values)
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Common Stock |
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Additional |
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Accumulated |
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Amount |
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Paid-in |
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Retained |
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Treasury Stock |
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Comprehensive |
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Shares |
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at $ |
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Capital |
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Earnings |
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Shares |
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Amount |
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Loss |
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Total |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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( |
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Other comprehensive income |
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Issuance of common stock pursuant to stock-based compensation plans |
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Employee shares withheld for taxes |
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Stock-based compensation expense |
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Balance at September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See notes to consolidated financial statements.
6
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023
(In thousands, except par values)
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Common Stock |
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Additional |
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Accumulated |
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Amount |
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Paid-in |
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Retained |
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Treasury Stock |
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Comprehensive |
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Shares |
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at $ |
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Capital |
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Earnings |
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Shares |
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Amount |
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Loss |
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Total |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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Other comprehensive loss |
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Issuance of common stock pursuant to stock-based compensation plans |
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Employee shares withheld for taxes |
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Stock-based compensation expense |
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Balance at September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See notes to consolidated financial statements.
7
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(In thousands)
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Three Months Ended September 30, |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
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Depreciation and amortization |
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Deferred income taxes |
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Equity in net loss of equity-method investees |
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Stock-based compensation, net |
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Long-lived asset impairment |
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Loss on sale of assets |
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Other non-cash items, net |
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(Decrease) increase in cash attributable to changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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Other current assets |
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Other assets and liabilities |
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Accounts payable and accrued expenses |
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Net cash (used in) provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of property, plant and equipment |
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Proceeds from sale of assets |
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Net cash provided by (used in) investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Borrowings under bank revolving credit facility |
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Repayments under bank revolving credit facility |
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Repayments under term loan |
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( |
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( |
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Payments of other debt, net |
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( |
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( |
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Employee shares withheld for taxes |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash |
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( |
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Net increase (decrease) in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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See notes to consolidated financial statements.
8
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands, except par values and per share data)
The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993. Hain Celestial is a leading global health and wellness company whose purpose is to inspire healthier living for people, communities and the planet through better-for-you brands. For more than 30 years, Hain Celestial has intentionally focused on delivering nutrition and well-being that positively impacts today and tomorrow. Headquartered in Hoboken, N.J., Hain Celestial’s products across snacks, baby & kids, beverages, meal preparation, and personal care are marketed and sold in over
The Company’s leading brands include Garden Veggie Snacks™, Terra® chips, Garden of Eatin’® snacks, Hartley’s® Jelly, Earth’s Best® and Ella’s Kitchen® baby and kids foods, Celestial Seasonings® teas, Joya® and Natumi® plant-based beverages, Greek Gods® yogurt, Cully & Sully®, Yorkshire Provender®, New Covent Garden® and Imagine® soups, Yves® and Linda McCartney’s® (under license) meat-free, and Avalon Organics® personal care, among others.
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2.
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 loss includes the Company's equity in the current earnings or losses of such companies.
The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2024 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 months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2025. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2024 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.
All dollar amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousands, except par values and per share amounts, unless otherwise indicated.
Significant Accounting Policies
The Company's significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements in the Form 10-K. Included herein are certain updates to those policies.
Transfer of Financial Assets
The Company accounts for transfers of financial assets, such as non-recourse accounts receivable financing arrangements, when the Company has surrendered 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 buyers and satisfied all of the conditions to report the transfer of financial assets in their entirety as a sale. The principal amount of receivables sold under these arrangements was $
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The amendments address investor requests for more detailed expense information and require additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which will require entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective
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tax rate. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction, pretax income (loss) from continuing operations, and income tax expense (benefit). The amendments are effective for fiscal years beginning after December 15, 2024 and for interim periods within fiscal years beginning after December 15, 2025. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
The following table sets forth the computation of basic and diluted net loss per share on the consolidated statements of operations:
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Three Months Ended September 30, |
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2024 |
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2023 |
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Numerator: |
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Net loss |
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$ |
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$ |
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Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net loss per common share |
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$ |
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$ |
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Due to the Company’s net loss in each of the three months ended September 30, 2024 and September 30, 2023, all common stock equivalents such as stock options, unvested restricted share units and performance share units have been excluded from the computation of diluted net loss per share. The effect of the stock options and unvested restricted share units would have been anti-dilutive to the computations. The performance share units were contingently issuable based on market conditions and such conditions had not been achieved during the respective periods.
ParmCrisps®
On August 30, 2024, the Company completed the sale of its ParmCrisps® business for total cash consideration of $
Inventories consisted of the following:
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September 30, 2024 |
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June 30, 2024 |
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Finished goods |
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$ |
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$ |
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Raw materials, work-in-progress, and packaging |
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$ |
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$ |
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Property, plant and equipment, net consisted of the following:
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September 30, 2024 |
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June 30, 2024 |
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Land |
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$ |
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$ |
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Buildings and improvements |
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Machinery and equipment |
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Computer hardware and software |
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Furniture and fixtures |
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Leasehold improvements |
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Construction in progress |
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Less: Accumulated depreciation |
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$ |
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$ |
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Depreciation expense for the three months ended September 30, 2024 and 2023 was $
The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Western Europe. The Company determines if an arrangement is or contains a lease at inception. At September 30, 2024 and June 30, 2024, right of use assets related to finance leases are included in property, plant and equipment, net on the consolidated balance sheets. Lease liabilities for finance leases are included in the current and non-current portions of long-term debt on the consolidated balance sheets. Current portion of the operating lease liabilities are included in accrued expenses and other current liabilities on the consolidated balance sheets. The Company does not have any related party leases, and sublease transactions are de minimis.
The components of lease expenses for the three months ended September 30, 2024 and 2023 were as follows:
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Three Months Ended |
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September 30, 2024 |
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September 30, 2023 |
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Operating lease expenses |
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$ |
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$ |
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Finance lease expenses |
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Variable lease expenses |
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Short-term lease expenses |
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Total lease expenses |
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$ |
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$ |
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Goodwill
The following table provides the changes in the carrying value of goodwill by reportable segment:
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North |
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International |
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Total |
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Balance as of June 30, 2024(1) |
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$ |
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$ |
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$ |
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Divestiture(2) |
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Translation |
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Balance as of September 30, 2024 |
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$ |
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$ |
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$ |
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(2) During the three months ended September 30, 2024, the Company completed the divestiture of ParmCrisps®, a component of the North America reportable segment. Goodwill of $
As of September 30, 2024, the Company performed an assessment of factors to determine whether it was more likely than not that the fair value of its reporting units was less than its carrying amount, including goodwill. The Company concluded that were no events or circumstances that warranted an interim quantitative impairment test for goodwill during the three months ended September 30, 2024. As of September 30, 2024, goodwill associated with the U.S. reporting unit had a carrying value of $
Other Intangible Assets
The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
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September 30, 2024 |
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June 30, 2024 |
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Non-amortized intangible assets: |
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Trademarks and tradenames(1) |
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$ |
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$ |
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Amortized intangible assets: |
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Other intangibles |
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Less: Accumulated amortization |
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( |
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( |
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Net amortized intangible assets |
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Net other intangible assets |
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$ |
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$ |
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(1) The gross carrying value of trademarks and tradenames is reflected net of $
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There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three months ended September 30, 2024 or 2023.
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
Amortization expense included in the consolidated statements of operations is as follows:
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Three Months Ended September 30, |
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2024 |
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2023 |
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Amortization of acquired intangibles |
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$ |
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$ |
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Debt and borrowings consisted of the following:
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September 30, 2024 |
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June 30, 2024 |
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Revolving credit facility |
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$ |
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$ |
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Term loans |
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Less: Unamortized issuance costs |
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( |
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Other borrowings(1) |
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Short-term borrowings and current portion of long-term debt(2) |
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Long-term debt, less current portion |
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$ |
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$ |
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(1) Includes $
(2) Includes $
Amended and Restated Credit Agreement
On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement (as amended, the “Credit Agreement”). The Credit Agreement provides for senior secured financing of $
The Credit Agreement includes financial covenants that require compliance with a consolidated secured leverage ratio, a consolidated leverage ratio and a consolidated interest coverage ratio. Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be
During the Second Amendment Period, loans under the Credit Agreement bear interest at (a) Term SOFR plus
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Period is determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement as amended by the Second Amendment. Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at September 30, 2024 was
As of September 30, 2024, there were $
Credit Agreement Issuance Costs
In connection with the First and Second Amendments to its Credit Agreement during the second quarter of fiscal year 2023 and first quarter of fiscal year 2024, respectively, the Company incurred debt issuance costs of approximately $
Interest paid during the three months ended September 30, 2024 and September 30, 2023 was $
In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. However, to the extent that application of the estimated annual effective tax rate is not representative of the quarterly portion of actual tax expense expected to be recorded for the year in a jurisdiction, the Company determines the provision for income taxes based on actual year-to-date income (loss), which has been the case for certain jurisdictions for the quarter ended September 30, 2024. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.
The effective income tax rate was an expense of
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The following table presents the changes in accumulated other comprehensive loss (“AOCL”):
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Foreign |
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Deferred |
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Deferred |
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Deferred |
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Total |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income before reclassifications |
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( |
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Amounts reclassified into income |
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( |
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( |
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( |
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Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2023(1) |
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( |
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( |
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Balance at September 30, 2023 |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
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Balance at June 30, 2024 |
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$ |
( |
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$ |
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