10-Q 1 hain-20210930.htm 10-Q hain-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________ 
FORM 10-Q
___________________________________________ 
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
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. 0-22818
___________________________________________ 
hain-20210930_g1.jpg
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
___________________________________________ 
Delaware22-3240619
(State or other jurisdiction
of incorporation)
(I.R.S. Employer Identification No.)

1111 Marcus Avenue, Lake Success, NY 11042
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (516587-5000
Former name, former address and former fiscal year, if changed since last report: N/A
___________________________________________ 



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 $0.01 per shareHAIN
The 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 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).

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 filerAccelerated filer¨
Non-accelerated filer¨Smaller reporting companyEmerging 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 November 2, 2021, there were 94,581,455 shares outstanding of the registrant’s Common Stock, par value $0.01 per share.


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

 
1

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (the “Form 10-Q”) contains forward-looking statements within the meaning of 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, business strategy, supply chain, brand portfolio and product performance; the COVID-19 pandemic; current or future macroeconomic trends; and future corporate acquisitions or dispositions.

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; challenges and uncertainty resulting from the COVID-19 pandemic; our ability to manage our supply chain effectively; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; reliance on independent distributors; the availability of organic ingredients; risks associated with our international sales and operations; risks associated with outsourcing arrangements; our ability to execute our cost reduction initiatives and related strategic initiatives; our reliance on independent certification for a number of our products; the reputation of our Company and our brands; our ability to use and protect trademarks; general economic conditions; input cost inflation; the United Kingdom’s exit from the European Union; cybersecurity incidents; disruptions to information technology systems; the impact of 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; concentration in the ownership of our common stock; 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 our most recent Annual Report on Form 10-K, this Form 10-Q and our other filings from time to time with the U.S. Securities and Exchange Commission.

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)
SEPTEMBER 30, 2021 AND JUNE 30, 2021
(In thousands, except par values)
September 30,June 30,
20212021
ASSETS
Current assets:
Cash and cash equivalents$28,962 $75,871 
Accounts receivable, less allowance for doubtful accounts of $1,210 and $1,314, respectively
181,048 174,066 
Inventories280,176 285,410 
Prepaid expenses and other current assets38,496 39,834 
Assets held for sale3,642 1,874 
Total current assets532,324 577,055 
Property, plant and equipment, net312,426 312,777 
Goodwill863,348 871,067 
Trademarks and other intangible assets, net308,588 314,895 
Investments and joint ventures16,718 16,917 
Operating lease right-of-use assets, net88,387 92,010 
Other assets20,474 21,187 
Total assets$2,142,265 $2,205,908 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$172,733 $171,947 
Accrued expenses and other current liabilities123,296 117,957 
Current portion of long-term debt335 530 
Total current liabilities296,364 290,434 
Long-term debt, less current portion345,414 230,492 
Deferred income taxes40,345 42,639 
Operating lease liabilities, noncurrent portion82,176 85,929 
Other noncurrent liabilities29,210 33,531 
Total liabilities793,509 683,025 
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none
  
Common stock - $.01 par value, authorized 150,000 shares; issued: 109,568 and 109,507 shares, respectively; outstanding: 94,576 and 99,069 shares, respectively
1,096 1,096 
Additional paid-in capital1,191,817 1,187,530 
Retained earnings710,636 691,225 
Accumulated other comprehensive loss(93,974)(73,011)
1,809,575 1,806,840 
Less: Treasury stock, at cost, 14,992 and 10,438 shares, respectively
(460,819)(283,957)
Total stockholders’ equity1,348,756 1,522,883 
Total liabilities and stockholders’ equity$2,142,265 $2,205,908 
See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(In thousands, except per share amounts) 
 Three Months Ended September 30,
 20212020
Net sales$454,903 $498,627 
Cost of sales349,485 379,463 
Gross profit105,418 119,164 
Selling, general and administrative expenses73,989 79,521 
Amortization of acquired intangible assets2,095 2,433 
Productivity and transformation costs
3,983 1,433 
Proceeds from insurance claim
(196) 
Long-lived asset impairment 32,497 
Operating income25,547 3,280 
Interest and other financing expense, net1,856 2,453 
Other income, net(788)(1,373)
Income from continuing operations before income taxes and equity in net loss of equity-method investees24,479 2,200 
Provision for income taxes4,542 12,962 
Equity in net loss of equity-method investees526 19 
Net income (loss) from continuing operations$19,411 $(10,781)
Net income from discontinued operations, net of tax 11,266 
Net income$19,411 $485 
Net income (loss) per common share:
Basic net income (loss) per common share from continuing operations$0.20 $(0.11)
Basic net income per common share from discontinued operations 0.11 
Basic net income per common share$0.20 $ 
Diluted net income (loss) per common share from continuing operations$0.20 $(0.11)
Diluted net income per common share from discontinued operations 0.11 
Diluted net income per common share$0.20 $ 
Shares used in the calculation of net income (loss) per common share:
Basic97,121 101,558 
Diluted97,438 101,558 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(In thousands)
 Three Months Ended
September 30, 2021September 30, 2020
 
Pre-tax
amount
Tax (expense) benefitAfter-tax amount
Pre-tax
amount
Tax (expense) benefitAfter-tax amount
Net income$19,411 $485 
Other comprehensive (loss) income:
Foreign currency translation adjustments before reclassifications$(22,805)$ (22,805)$33,957 $ 33,957 
Change in deferred gains on cash flow hedging instruments44 (9)35 50 (10)40 
Change in deferred gains (losses) on net investment hedging instruments2,287 (480)1,807 (3,787)795 (2,992)
Total other comprehensive (loss) income
$(20,474)$(489)$(20,963)$30,220 $785 $31,005 
Total comprehensive (loss) income $(1,552)$31,490 
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 
 Shares
at $.01
CapitalEarningsSharesAmountLossTotal
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 plans
61    
Shares withheld for payment of employee payroll taxes due on shares issued under stock-based compensation plans
29 (1,175)(1,175)
Repurchases 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 STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Shares
at $.01
CapitalEarningsSharesAmountLoss Total
Balance at June 30, 2020109,123 $1,092 $1,171,875 $614,171 7,238 $(172,192)$(171,392)$1,443,554 
Net income485 485 
Cumulative effect of adoption of ASU 2016-02
(310)(310)
Other comprehensive income
31,005 31,005 
Issuance of common stock pursuant to stock-based compensation plans
54 1 (1) 
Shares withheld for payment of employee payroll taxes due on shares issued under stock-based compensation plans
20 (468)(468)
Repurchases of common stock1,281 (42,052)(42,052)
Stock-based compensation expense4,367 4,367 
Balance at September 30, 2020109,177 $1,093 $1,176,241 $614,346 8,539 $(214,712)$(140,387)$1,436,581 

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 THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(In thousands)
 Three Months Ended September 30,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$19,411 $485 
Net income from discontinued operations 11,266 
Net income (loss) from continuing operations19,411 (10,781)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations:
Depreciation and amortization10,855 13,761 
Deferred income taxes(2,105)(930)
Equity in net income of equity-method investees526 19 
Stock-based compensation4,287 4,367 
 Long-lived asset impairment 32,497 
Gain on sale of assets(276) 
Gain on sale of businesses (620)
Other non-cash items including unrealized currency gains, net(1,093)(1,047)
(Decrease) increase in cash attributable to changes in operating assets and liabilities:
Accounts receivable(9,443)(3,575)
Inventories2,277 (44,962)
Other current assets900 37,869 
Other assets and liabilities(1,566)(1,541)
Accounts payable and accrued expenses13,813 15,612 
Net cash provided by operating activities from continuing operations37,586 40,669 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(17,810)(12,155)
Investment in joint venture(408) 
Proceeds from sale of assets164  
Proceeds from sale of businesses and other 4,427 
Net cash used in investing activities from continuing operations
(18,054)(7,728)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under bank revolving credit facility120,000 55,000 
Repayments under bank revolving credit facility(5,000)(47,000)
Repayments of other debt, net(237)(1,439)
Shares withheld for payment of employee payroll taxes(1,175)(468)
Share repurchases(177,103)(42,052)
Net cash used in financing activities from continuing operations
(63,515)(35,959)
Effect of exchange rate changes on cash from continuing operations(2,926)2,500 
Net decrease in cash and cash equivalents(46,909)(518)
Cash and cash equivalents at beginning of period75,871 37,771 
Cash and cash equivalents at end of period$28,962 $37,253 

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 with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993 and is headquartered in Lake Success, New York. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet. The Company continues to be a leading marketer, manufacturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores in over 80 countries worldwide. The Company operates under two reportable segments: North America and International.

Discontinued Operations
The financial statements separately report discontinued operations and the results of continuing operations (see Note 4). All footnotes exclude discontinued operations unless otherwise noted.

2.    BASIS OF PRESENTATION

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

The Company's unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2021 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the three months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2021 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.

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

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation.

Transfer of Financial Assets

The Company has non-recourse accounts receivable financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash. The Company transferred accounts receivables 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 $22,889 and $14,360 during the three months ended September 30, 2021 and 2020, respectively. The incremental cost of accounts receivable financing arrangements is included in Interest and other financing expense, net in the Company’s Consolidated Statements of Operations. The proceeds from the sale of receivables are included in cash from operating activities in the accompanying Consolidated Statements of Cash Flows.

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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.

Recently Adopted Accounting Pronouncements

Issued by the Financial Accounting Standards Board (“FASB”), ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. Further, ASC 815 requires qualitative disclosures that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

During the first quarter of fiscal year 2022, the Company adopted the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.


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3.    EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share:
 Three Months Ended September 30,
 20212020
Numerator:
Net income (loss) from continuing operations$19,411 $(10,781)
Net income from discontinued operations 11,266 
Net income$19,411 $485 
Denominator:
Basic weighted average shares outstanding
97,121 101,558 
Effect of dilutive stock options, unvested restricted stock and unvested restricted share units
317  
Diluted weighted average shares outstanding
97,438 101,558 
Basic net income (loss) per common share:
Continuing operations$0.20 $(0.11)
Discontinued operations 0.11 
Basic net income per common share$0.20 $ 
Diluted net income (loss) per common share:
Continuing operations$0.20 $(0.11)
Discontinued operations 0.11 
Diluted net income per common share$0.20 $ 

Basic net income (loss) per share excludes the dilutive effects of stock options, unvested restricted stock and unvested restricted share units.

Anti-dilutive restricted stock awards and stock options excluded from our calculation of diluted net income (loss) per share for the three months ended September 30, 2021 were de minimis. There were 1,299 stock-based awards excluded for the three months ended September 30, 2021 as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the period.

Due to our net loss from continuing operations in the three months ended September 30, 2020, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per common share because the effect would have been anti-dilutive to the computations in the period.

Share Repurchase Program

In June 2017 and August 2021, the Company's Board of Directors authorized the repurchase of up to $250,000 and $300,000 of the Company’s issued and outstanding common stock, respectively. Share repurchases under the 2021 authorization commenced in August 2021, after the 2017 authorization was fully utilized. Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise. The authorization does not have a stated expiration date. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations. During the three months ended September 30, 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. As of September 30, 2021, the Company had $206,811 of remaining authorization under the share repurchase program. During the three months ended September 30, 2020, the Company repurchased 1,281 shares under the repurchase program for a total of $42,027, excluding commissions, at an average price of $32.81 per share.

4.     DISPOSITIONS

GG UniqueFiber®

11

On June 28, 2021, the Company completed the divestiture of its crispbread crackers business, GG UniqueFiber® (“GG”) for total cash consideration of $336. The sale of GG is consistent with the Company’s transformation and portfolio simplification process. GG operated in Norway and was part of the Company’s International reportable segment. The Company deconsolidated the net assets of GG during the twelve months ended June 30, 2021, recognizing a pre-tax loss on sale of $3,753.

Dream® and WestSoy®

On April 15, 2021, the Company completed the divestiture of its North America non-dairy beverages business, consisting of the Dream® and WestSoy® brands, for total cash consideration of $33,000, subject to customary post-closing adjustments. The final purchase price was $31,320. The non-dairy beverage business was considered to be non-core within our broader North American business, and the sale aligns with the Company’s portfolio simplification process. The business operated out of the United States and Canada and was part of the Company’s North America reportable segment. The Company deconsolidated the net assets of the North American non-dairy beverage business during the twelve months ended June 30, 2021, recognizing a pre-tax gain on sale of $7,519.

Fruit

In August 2020, the Company's Board of Directors approved a plan to sell its prepared fresh fruit, fresh fruit drinks and fresh fruit desserts division ("Fruit"), primarily consisting of the Orchard House® Foods Limited business and associated brands. This decision supported the Company's overall strategy as the Fruit business did not align, and had limited synergies, with the rest of the Company's businesses. The Company determined that the held for sale criteria was met and classified the assets and liabilities of the Fruit business as held for sale as of September 30, 2020 and December 31, 2020, recognizing pre-tax non-cash losses of $32,497 and $23,596, respectively, to reduce the carrying value to its estimated fair value less costs to sell. The sale was completed on January 13, 2021 for a total cash consideration of $38,547, recognizing a pre-tax loss on sale of $1,904.

Danival

The Company entered into a definitive stock purchase agreement on June 30, 2020 for the sale of its Danival business, a component of the International reportable segment, and the transaction closed on July 21, 2020. The Company deconsolidated the net assets of the Danival business upon closing of the sale during the quarter ended September 30, 2020, recognizing a pre-tax gain on sale of $611.

Discontinued Operations

Sale of Tilda Business

On August 27, 2019, the Company sold the entities comprising the Tilda Group Entities and certain other assets of the Tilda business for an aggregate price of $342,000 in cash, subject to customary post-closing adjustments based on the balance sheets of the Tilda business. The disposition of the Tilda operating segment represented a strategic shift that had a major impact on the Company’s operations and financial results and has been accounted for as discontinued operations. The following table presents the major classes of Tilda’s results within Net income from discontinued operations, net of tax in our Consolidated Statements of Operations:
Three Months Ended September 30,
2020
Net sales$ 
Cost of sales 
Gross profit
 
Other expense75 
Net loss from discontinued operations before income taxes(75)
Benefit for income taxes(1)
(11,331)
Net income from discontinued operations, net of tax$11,256 

(1) Includes $11,331 of tax benefit related to the tax gain on the sale of Tilda for the three months ended September 30, 2020.

There were no assets or liabilities from discontinued operations associated with Tilda as of September 30, 2021 or June 30, 2021.

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The Company's dispositions are described in more detail in Note 5, Dispositions, in the Notes to the Consolidated Financial Statements in the Form 10-K.

5.    INVENTORIES

Inventories consisted of the following:
September 30,
2021
June 30,
2021
Finished goods$180,604 $187,884 
Raw materials, work-in-progress and packaging99,572 97,526 
$280,176 $285,410 

At each period end, inventory is reviewed to ensure that it is recorded at the lower of cost or net realizable value. During the three months ended September 30, 2021 and 2020, the Company recorded inventory write-downs of $0 and $204, respectively.

6.    PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:
September 30,
2021
June 30,
2021
Land$13,252 $13,666 
Buildings and improvements55,199 58,143 
Machinery and equipment306,275 306,811 
Computer hardware and software66,076 65,132 
Furniture and fixtures23,874 23,546 
Leasehold improvements56,371 54,360 
Construction in progress23,246 21,633 
544,293 543,291 
Less: accumulated depreciation and amortization231,867 230,514 
$312,426 $312,777 

Depreciation expense for the three months ended September 30, 2021 and 2020 was $7,408 and $9,703, respectively.

A facility in the United Kingdom was held for sale as of June 30, 2021 with a net carrying amount of 1,874. Additionally, a facility in the United States was held for sale as of September 30, 2021 with a net carrying amount of $1,768.
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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. A limited number of lease agreements include rental payments adjusted periodically for inflation.
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.

14

The components of lease expenses for the three months ended September 30, 2021 and 2020 were as follows:
Three Months Ended September 30,
20212020
Operating lease expenses$3,752 $3,956 
Finance lease expenses70 185 
Variable lease expenses403 866 
Short-term lease expenses1,365 913 
Total lease expenses$5,590 $5,920 

Additional information related to leases is as follows:
Three Months Ended September 30,
20212020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,745 $4,359 
Operating cash flows from finance leases$5 $3 
Financing cash flows from finance leases$60 $85 
ROU assets obtained in exchange for lease obligations:
Operating leases$319 $7,766 
Finance leases$ $15 
Weighted average remaining lease term:
Operating leases9.6 years10.1 years
Finance leases4.1 years2.1 years
Weighted average discount rate:
Operating leases3.3 %3.0 %
Finance leases4.2 %2.6 %

Supplemental balance sheet information related to leases was as follows:
LeasesClassification September 30, 2021June 30, 2021
Assets
Operating lease ROU assets, netOperating lease right-of-use assets, net$88,387 $92,010 
Finance lease ROU assets, netProperty, plant and equipment, net469 547 
Total leased assets$88,856 $92,557 
Liabilities
Current
OperatingAccrued expenses and other current liabilities$11,216 $10,870 
FinanceCurrent portion of long-term debt195 229 
Non-current
Operating Operating lease liabilities, noncurrent portion82,176 85,929 
FinanceLong-term debt, less current portion283 326 
Total lease liabilities $93,870 $97,354 


15

Maturities of lease liabilities as of September 30, 2021 were as follows:
Fiscal YearOperating leasesFinance leasesTotal
2022 (remainder of year)$10,094 $163 $10,257 
202314,499 133 14,632 
202412,712 51 12,763 
202511,313 51 11,364 
202610,741 51 10,792 
Thereafter52,096 76 52,172 
Total lease payments111,455 525 111,980 
Less: Imputed interest18,063 47 18,110 
Total lease liabilities$93,392 $478 $93,870 
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8.    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table provides the changes in the carrying value of goodwill by reportable segment:
North AmericaInternationalTotal
Balance as of June 30, 2021$600,812 $270,255 $871,067 
  Translation and other adjustments, net(777)(6,942)(7,719)
Balance as of September 30, 2021
$600,035 $263,313 $863,348 
Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
September 30,
2021
June 30,
2021
Non-amortized intangible assets:
Trademarks and tradenames$270,084 $273,471 
Amortized intangible assets:
Other intangibles143,884 146,856 
Less: accumulated amortization(105,380)(105,432)
Net carrying amount$308,588 $314,895 

There were no events or circumstances that warranted an interim impairment test for indefinite-lived intangible assets during the three months ended September 30, 2021 or 2020.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships and trademarks and tradenames and are amortized over their estimated useful lives of 5 to 25 years. Amortization expense included in continuing operations was as follows:
Three Months Ended September 30,
 20212020
Amortization of acquired intangibles$2,095 $2,433 

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9.    DEBT AND BORROWINGS

Debt and borrowings consisted of the following:
September 30,
2021
June 30,
2021
Revolving credit facility$344,969 $230,000 
Other borrowings780 1,022 
345,749 231,022 
Short-term borrowings and current portion of long-term debt335 530 
Long-term debt, less current portion$345,414 $230,492 

Credit Agreement

On February 6, 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a $1,000,000 revolving credit facility through February 6, 2023 and provides for a $300,000 term loan. Under the Credit Agreement, the revolving credit facility may be increased by an additional uncommitted $400,000, provided certain conditions are met.

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 and Canadian dollars as well as other currencies which may be designated. In addition, certain wholly-owned foreign subsidiaries 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 investments, acquisitions and loans. The Credit Agreement also requires the Company to satisfy certain financial covenants. Obligations under the Credit Agreement are guaranteed by certain existing and future domestic subsidiaries of the Company. As of September 30, 2021, there were $344,969 of borrowings outstanding under the revolving credit facility and $6,394 letters of credit outstanding under the Credit Agreement.

On May 8, 2019, the Company entered into the Third Amendment to the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), whereby, among other things, its allowable consolidated leverage ratio (as defined in the Credit Agreement) and interest coverage ratio (as defined in the Credit Agreement) were adjusted. The Company’s allowable consolidated leverage ratio is no more than 3.75 to 1.0 on September 30, 2020 and thereafter. Additionally, the Company’s required consolidated interest coverage ratio is no less than 3.75 to 1 through March 31, 2021 and no less than 4.0 to 1 thereafter.

The Amended Credit Agreement also required that the Company and the subsidiary guarantors enter into a Security and Pledge Agreement pursuant to which all of the obligations under the Amended Credit Agreement are secured by liens on assets of the Company and its material domestic subsidiaries, including stock of each of their direct subsidiaries and intellectual property, subject to agreed upon exceptions.

As of September 30, 2021, $648,637 was available under the Amended Credit Agreement, and the Company was in compliance with all associated covenants, as amended by the Amended Credit Agreement.

The Amended Credit Agreement provides that loans will bear interest at rates based on (a) the Eurocurrency Rate, as defined in the Credit Agreement, plus a rate ranging from 0.88% to 2.50% per annum; or (b) the Base Rate, as defined in the Credit Agreement, plus a rate ranging from 0.00% to 1.50% 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 Amended Credit Agreement. Swing Line loans and Global Swing Line loans denominated in U.S. dollars will bear interest at the Base Rate plus the Applicable Rate, and Global Swing Line loans denominated in foreign currencies shall bear interest based on the overnight Eurocurrency Rate for loans denominated in such currency plus the Applicable Rate. The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement at September 30, 2021 was 1.08%. Additionally, the Amended Credit Agreement contains a Commitment Fee, as defined in the Amended Credit Agreement, on the amount unused under the Amended Credit Agreement ranging from 0.20% to 0.45% per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.
 
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10.    INCOME TAXES

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

The effective income tax rate from continuing operations was expense of 18.6% and 589.2% for the three months ended September 30, 2021 and 2020, respectively. Lower effective income tax rate relative to our statutory tax rates for the current quarter is mainly due to the reversal of uncertain tax position accruals based on filing and approval of certain elections by the tax authorities. In addition, the effective income tax rates from continuing operations for the three months ended September 30, 2021 and 2020 were negatively impacted by provisions in the Tax Cuts and Jobs Act (the "Tax Act"), primarily related to Global Intangible Low Taxed Income ("GILTI") and limitations on the deductibility of executive compensation. Furthermore, the effective income tax rate from continuing operations for the three months ended September 30, 2020 was negatively impacted by various discrete items including the tax impact of the United Kingdom Fruit business reserve, the legal entity reorganization, and the UK rate change. The effective income tax rates in each period were also impacted by the geographical mix of earnings and state valuation allowance.

The income tax expense (benefit) from discontinued operations was $0 for the three months ended September 30, 2021, while the income tax benefit from discontinued operations was $11,331 for the three months ended September 30, 2020. The benefit for income tax for the three months ended September 30, 2020 was impacted by a legal entity reorganization.

11.     ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss ("AOCL"):
Three Months Ended September 30,
20212020
Foreign currency translation adjustments:
Other comprehensive (loss) income before reclassifications$(22,805)$32,776 
Amounts reclassified into income (1)
 1,181 
Deferred gains (losses) on cash flow hedging instruments:
    Other comprehensive gain (loss) before reclassifications535 (883)
Amounts reclassified into (expense) income (2)
(500)923 
Deferred gains (losses) on net investment hedging instruments:
Other comprehensive gain (loss) before reclassifications1,910 (2,890)
Amounts reclassified into expense (2)
(103)(102)
Net change in AOCL$(20,963)$31,005 

(1) Foreign currency translation gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially complete. During the three months ended September 30, 2020, the Company reclassified $1,181 of translation losses from AOCL to Other income, net on the Consolidated Statement of Operations.
(2) See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains (losses) on cash flow hedging instruments recorded in the Consolidated Statements of Operations in the three months ended September 30, 2021 and 2020.

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12.    STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

The Company has a stockholder approved plan, the Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the "2002 Plan"), under which the Company’s officers, senior management, other key employees, consultants and directors may be granted equity-based awards. The Company also grants shares under its 2019 Equity Inducement Award Program (the "2019 Inducement Program") to induce selected individuals to become employees of the Company. The 2002 Plan and 2019 Inducement Program are collectively referred to as the "Stock Award Plans". In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program”) that provides for performance and market equity awards that can be earned over defined performance periods. The Company's plans are described in Note 14, Stock-Based Compensation and Incentive Performance Plans, in the Notes to the Consolidated Financial Statements in the Form 10-K.

Compensation cost and related income tax benefits recognized in the Consolidated Statements of Operations for stock-based compensation plans were as follows:
  Three Months Ended September 30,
 20212020
Selling, general and administrative expense
$4,287 $4,367 
Related income tax benefit$273 $807 

Restricted Stock

Awards of restricted stock are either restricted stock awards ("RSAs") or restricted stock units ("RSUs") that are issued at no cost to the recipient. Performance-based or market-based RSUs are issued in the form of performance share units ("PSUs"). A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the three months ended September 30, 2021 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, 20211,780 $16.55 
Granted12 $39.81 
Vested(61)$21.78 
Forfeited(103)$15.43 
Non-vested RSAs, RSUs and PSUs outstanding at September 30, 20211,628 $16.53 

At September 30, 2021 and June 30, 2021, the table above includes a total of 1,299 and 1,382 shares (including an inducement grant of 350 shares made to our CEO as previously disclosed), respectively, that represent the target number of shares that may be earned under non-vested performance equity awards that are eligible to vest up to 300% of target. Vested shares during the current period include a total of 13 shares which vested based on certain performance-based metrics being met.
Three Months Ended September 30,
20212020
Fair value of RSAs, RSUs and PSUs granted$478 $4,398 
Fair value of shares vested$2,522 $1,056 
Tax benefit recognized from restricted shares vesting$246 $152 

At September 30, 2021, there was $5,169 of unrecognized stock-based compensation expense related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 1.1 years.

Subsequent to the quarter end, 1,299 shares underlying PSUs under the 2019-2021 LTI Program vested on November 6, 2021 at 100% of target based on achieving the target goal for total shareholder return.

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13.    INVESTMENTS

On October 27, 2015, the Company acquired a minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Founders Table Restaurant Group, LLC (“Founders Table”). Founders Table develops and operates fast-casual, fresh salad restaurants in the Northeast and Mid-Atlantic United States. The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Founders Table. At September 30, 2021 and June 30, 2021, the carrying value of the Company’s investment in Chop’t was $10,161 and $10,699, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

The Company also holds the following investments: (a) Hutchison Hain Organic Holdings Limited (“HHO”) with Hutchison China Meditech Ltd., a joint venture accounted for under the equity method of accounting, (b) Hain Future Natural Products Private Ltd. with Future Consumer Ltd, a joint venture accounted for under the equity method of accounting, and (c) Yeo Hiap Seng Limited, for which the Company holds a less than 1% equity ownership interest. The carrying value of these combined investments was $6,557 and $6,218 as of September 30, 2021 and June 30, 2021, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

14.    FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

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

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

The following table presents assets and liabilities measured at fair value on a recurring basis as of September 30, 2021: 
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments746  746  
Equity investment590 590   
Total$1,336 $590 $746 $ 
Liabilities:
Derivative financial instruments$9,007 $ $9,007 $ 
Total$9,007 $ $9,007 $ 

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The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2021:
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments699  699  
Equity investment646 646   
Total$1,345 $646 $699 $ 
Liabilities:
Derivative financial instruments$11,968 $