HAIN 10-Q

Hain Celestial Group Inc (HAIN)

10-Q 2020-11-09 For: 2020-09-30

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Added on April 10, 2026

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Delaware						22-3240619
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	HAIN	The NASDAQ Global Select Market


	Part I - Financial Information	Page

Item 1.	Financial Statements
	Consolidated Balance Sheets - September 3 0 , 2020 and June 30, 20 20	3
	Consolidated Statements of Operations - Three months ended Se ptember 3 0 , 2020 and 2019	4
	Consolidated Statements of Comprehensive Income (Loss ) - Three months ended September 3 0 , 2020 and 2019	5
	Consolidated Statement of Stockholders’ Equity - Three m onths ended September 3 0 , 2020 and 2019	6
	Consolidated Statements of Cash Flows - Three months ended September 3 0 , 2020 and 2019	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48

	Part II - Other Information

Items 3, 4 and 5 are not applicable
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 6.	Exhibits	50
Signatures		51


	September 30,		June 30,
	2020		2020
ASSETS
Current assets:
Cash and cash equivalents	$	27,523	$	37,771
Accounts receivable, less allowance for doubtful accounts of $1,189 and $638, respectively	166,086		170,969
Inventories	292,968		248,170
Prepaid expenses and other current assets	55,151		95,690
Assets held for sale	71,023		8,334
Total current assets	612,751		560,934
Property, plant and equipment, net	275,708		289,256
Goodwill	860,347		861,958
Trademarks and other intangible assets, net	319,760		346,462
Investments and joint ventures	17,899		17,439
Operating lease right-of-use assets	89,397		88,165
Other assets	23,872		24,238

Total assets	$	2,199,734	$	2,188,452
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	184,997	$	171,009
Accrued expenses and other current liabilities	117,352		124,045
Current portion of long-term debt	445		1,656

Liabilities related to assets held for sale	26,209		3,567
Total current liabilities	329,003		300,277
Long-term debt, less current portion	289,042		281,118
Deferred income taxes	30,985		51,849
Operating lease liabilities, noncurrent portion	82,962		82,962
Other noncurrent liabilities	31,161		28,692

Total liabilities	763,153		744,898
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: 109,177 and 109,123 shares, respectively; outstanding:100,638 and 101,885 shares, respectively	1,093		1,092
Additional paid-in capital	1,176,241		1,171,875
Retained earnings	614,346		614,171
Accumulated other comprehensive loss	(140,387)		(171,392)
	1,651,293		1,615,746
Less: Treasury stock, at cost, 8,539 and 7,238 shares, respectively	(214,712)		(172,192)
Total stockholders’ equity	1,436,581		1,443,554
Total liabilities and stockholders’ equity	$	2,199,734	$	2,188,452


	Three Months Ended September 30,
	2020		2019
Net sales	$	498,627	$	482,076
Cost of sales	379,463		384,245
Gross profit	119,164		97,831
Selling, general and administrative expenses	79,152		80,680
Amortization of acquired intangible assets	2,433		3,083
Productivity and transformation costs	1,802		14,175

Proceeds from insurance claim	—		(2,562)


Long-lived asset impairment	32,497		—
Operating income	3,280		2,455
Interest and other financing expense, net	2,453		6,294
Other (income) expense, net	(1,373)		1,328
Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees	2,200		(5,167)
Provision (benefit) for income taxes	12,962		(531)
Equity in net loss of equity-method investees	19		317
Net loss from continuing operations	$	(10,781)	$	(4,953)
Net income (loss) from discontinued operations, net of tax	11,266		(102,068)
Net income (loss)	$	485	$	(107,021)

Net (loss) income per common share:
Basic net loss per common share from continuing operations	$	(0.11)	$	(0.05)
Basic net income (loss) per common share from discontinued operations	0.11		(0.98)
Basic net loss per common share	$	—	$	(1.03)

Diluted net loss per common share from continuing operations	$	(0.11)	$	(0.05)
Diluted net income (loss) per common share from discontinued operations	0.11		(0.98)
Diluted net loss per common share	$	—	$	(1.03)

Shares used in the calculation of net (loss) income per common share:
Basic	101,558		104,225
Diluted	101,558		104,225


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition Report pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934


	Three Months Ended
	September 30, 2020						September 30, 2019
	Pre-tax amount		Tax (expense) benefit		After-tax amount		Pre-tax amount		Tax (expense) benefit		After-tax amount
Net income (loss)					$	485					$	(107,021)

Other comprehensive income (loss):
Foreign currency translation adjustments before reclassifications	$	33,957	$	—	$	33,957	$	(38,942)	$	—	$	(38,942)
Reclassification of currency translation adjustment included in Net loss from discontinued operations, net of tax	—		—		—		95,120		—		95,120
Change in deferred gains (losses) on cash flow hedging instruments	50		(10)		40		(78)		10		(68)
Change in deferred gains (losses) on net investment hedging instruments	(3,787)		795		(2,992)		—		—		—

Total other comprehensive income	$	30,220	$	785	$	31,005	$	56,100	$	10	$	56,110

Total comprehensive income (loss)					$	31,490					$	(50,911)


	Common Stock			Additional							Accumulated Other
		Amount		Paid-in		Retained		Treasury Stock			Comprehensive
	Shares	at $.01		Capital		Earnings		Shares	Amount		(Loss) Income		Total
Balance at June 30, 2020	109,123	$	1,092	$	1,171,875	$	614,171	7,238	$	(172,192)	$	(171,392)	$	1,443,554
Net income						485							485
Cumulative effect of adoption of ASU 2016-13						(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 stock								1,281	(42,052)				(42,052)
Stock-based compensation expense				4,367									4,367
Balance at September 30, 2020	109,177	$	1,093	$	1,176,241	$	614,346	8,539	$	(214,712)	$	(140,387)	$	1,436,581


	September 30, 2020		June 30, 2020
Finished goods	$	192,470	$	158,162
Raw materials, work-in-progress and packaging	100,498		90,008
	$	292,968	$	248,170


	September 30, 2020		June 30, 2020
Land	$	14,162	$	13,866
Buildings and improvements	69,246		74,325
Machinery and equipment	284,048		288,466
Computer hardware and software	58,320		60,391
Furniture and fixtures	21,095		20,044
Leasehold improvements	39,139		40,876
Construction in progress	19,295		16,489
	505,305		514,457
Less: accumulated depreciation and amortization	229,597		225,201
	$	275,708	$	289,256


Leases	Classification	September 30, 2020		June 30, 2020
Assets
Operating lease ROU assets, net	Operating lease right-of-use assets	$	89,397	$	88,165
Operating lease ROU assets, net	Assets held for sale	2,765		—
Finance lease ROU assets, net	Property, plant and equipment, net	435		691
Total leased assets		$	92,597	$	88,856

Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	13,146	$	12,338
Operating	Liabilities related to assets held for sale	2,591		—
Finance	Current portion of long-term debt	228		308
Non-current
Operating	Operating lease liabilities, noncurrent portion	82,962		82,962
Finance	Long-term debt, less current portion	210		316
Total lease liabilities		$	99,137	$	95,924


Fiscal Year	Operating leases		Finance leases		Total
2021 (remainder of year)	$	10,570	$	173	$	10,743
2022	14,399		195		14,594
2023	13,460		82		13,542
2024	11,539		—		11,539
2025	10,162		—		10,162
Thereafter	57,367		—		57,367
Total lease payments	117,497		450		117,947
Less: Imputed interest	18,798		12		18,810
Total lease liabilities	$	98,699	$	438	$	99,137


	North America		International		Total
Balance as of June 30, 2020 (a)	$	606,055	$	255,903	$	861,958


Reclassification of goodwill to Assets held for sale	—		(13,486)		(13,486)

Translation and other adjustments, net	540		11,335		11,875
Balance as of September 30, 2020 (a)	$	606,595	$	253,752	$	860,347


	September 30, 2020		June 30, 2020
Non-amortized intangible assets:
Trademarks and tradenames (a)	$	274,196	$	278,103
Amortized intangible assets:
Other intangibles	148,212		184,854
Less: accumulated amortization	(102,648)		(116,495)
Net carrying amount	$	319,760	$	346,462


	Number of Shares and Units	Weighted Average Grant Date Fair Value (per share)
Non-vested RSAs, RSUs and PSUs outstanding at June 30, 2020	2,049	$	15.85
Granted	133	$	33.14
Vested	(44)	$	24.11
Forfeited	(49)	$	14.18
Non-vested RSAs, RSUs and PSUs outstanding at September 30, 2020	2,089	$	16.79


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Cash equivalents	$	7	$	7	$	—	$	—
Derivative financial instruments	885		—		885		—
Equity investment	512		512		—		—
Total	$	1,404	$	519	$	885	$	—
Liabilities:
Derivative financial instruments	$	11,232	$	—	$	11,232	$	—
Total	$	11,232	$	—	$	11,232	$	—


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Cash equivalents	$	7	$	7	$	—	$	—
Derivative financial instruments	1,014		—		1,014		—
Equity investment	562		562		—		—
Total	$	1,583	$	569	$	1,014	$	—
Liabilities:
Derivative financial instruments	$	6,405	$	—	$	6,405	$	—

Total	$	6,405	$	—	$	6,405	$	—


Interest Rate Derivative	Number of Instruments	Notional Amount
Interest Rate Swap	4	$230,000


	September 30, 2020		June 30, 2020
Revolving credit facility	$	288,000	$	280,000


Other borrowings	1,487		2,774
	289,487		282,774
Short-term borrowings and current portion of long-term debt	445		1,656
Long-term debt, less current portion	$	289,042	$	281,118


Foreign Currency Derivative	Number of Instruments	Notional Sold	Notional Purchased
Cross-currency swap	1	€24,700	$26,775


	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Prepaid expenses and other current assets	$	—	Accrued expenses and other current liabilities / Other noncurrent liabilities	$	737
Cross-currency swaps	Prepaid expenses and other current assets	674		Other noncurrent liabilities	10,407

Total derivatives designated as hedging instruments		674			11,144

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Prepaid expenses and other current assets	211		Accrued expenses and other current liabilities	88
Total derivative instruments		$	885		$	11,232


Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in OCI on Derivatives				Location of Gain (Loss) Reclassified from Accumulated OCL into Income	Amount of Gain (Loss) Reclassified from Accumulated OCL into Income
	Three Months Ended September 30,					Three Months Ended September 30,
	2020		2019			2020		2019
Interest rate swaps	$	61	$	—	Interest and other financing expense, net	$	(58)	$	—
Cross-currency swaps	(1,177)		—		Interest and other financing expense, net / Other expense (income), net	(1,183)		—
Foreign currency forward contracts	(2)		(6)		Cost of sales	73		78
Total	$	(1,118)	$	(6)		$	(1,168)	$	78


				Location and Amount of Gain (Loss) Recognized in the Consolidated Statement of Operations on Cash Flow Hedging Relationships
				Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
				Cost of sales		Interest and other financing expense, net		Other expense (income), net		Cost of sales		Interest and other financing expense, net		Other expense (income), net
The effects of cash flow hedging:
	Gain (loss) on cash flow hedging relationships
		Interest rate swaps
			Amount of gain (loss) reclassified from accumulated OCL into income	$	—	$	(58)	$	—	$	—	$	—	$	—

		Cross-currency swaps
			Amount of gain (loss) reclassified from accumulated OCL into income	$	—	$	41	$	(1,224)	$	—	$	—	$	—

		Foreign currency forward contracts
			Amount of gain (loss) reclassified from accumulated OCL into income	$	73	$	—	$	—	$	78	$	—	$	—


Derivatives in Net Investment Hedging Relationships	Amount of Gain (Loss) Recognized in OCI on Derivatives				Location of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivatives (Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,					Three Months Ended September 30,
	2020		2019			2020		2019
Cross-currency swaps	$	(3,658)	$	—	Interest and other financing expense, net	$	129	$	—


	Balance at June 30, 2020		Charges (reversals)		Amounts Paid		Foreign Currency Translation & Other Adjustments		Balance at September 30, 2020
Termination benefits and personnel realignment	$	11,541	$	352	$	(4,735)	$	100	$	7,258


	September 30, 2020		June 30, 2020
United States	$	150,573	$	146,633
United Kingdom	156,530		149,943
All Other	107,625		105,303
Total	$	414,728	$	401,879


	Three Months Ended						Change in
	September 30, 2020			September 30, 2019			Dollars		Percentage
Net sales	$	498,627	100.0%	$	482,076	100.0%	$	16,551	3.4%
Cost of sales	379,463		76.1%	384,245		79.7%	(4,782)		(1.2)%
Gross profit	119,164		23.9%	97,831		20.3%	21,333		21.8%
Selling, general and administrative expenses	79,152		15.9%	80,680		16.7%	(1,528)		(1.9)%
Amortization of acquired intangible assets	2,433		0.5%	3,083		0.6%	(650)		(21.1)%
Productivity and transformation costs	1,802		0.4%	14,175		2.9%	(12,373)		(87.3)%


Proceeds from insurance claim	—		—%	(2,562)		(0.5)%	2,562		*

Long-lived asset impairment	32,497		6.5%	—		—%	32,497		*
Operating income	3,280		0.7%	2,455		0.5%	825		33.6%
Interest and other financing expense, net	2,453		0.5%	6,294		1.3%	(3,841)		(61.0)%
Other (income) expense, net	(1,373)		(0.3)%	1,328		0.3%	(2,701)		*
Income (loss) from continuing operations before income taxes and equity in net loss of equity-method investees	2,200		0.4%	(5,167)		(1.1)%	7,367		*
Provision (benefit) for income taxes	12,962		2.6%	(531)		(0.1)%	13,493		*
Equity in net loss of equity-method investees	19		—%	317		—%	(298)		(94.0)%
Net loss from continuing operations	$	(10,781)	(2.2)%	$	(4,953)	(1.0)%	$	(5,828)	*
Net income (loss) from discontinued operations, net of tax	11,266		2.3%	(102,068)		(21.2)%	113,334		*
Net income (loss)	$	485	0.1%	$	(107,021)	(22.2)%	$	107,506	*

Adjusted EBITDA	$	54,895	11.0%	$	32,090	6.7%	$	22,805	71.1%
Diluted net loss per common share from continuing operations	$	(0.11)		$	(0.05)		$	(0.06)	*
Diluted net income (loss) per common share from discontinued operations	0.11			(0.98)			1.09		*
Diluted net loss per common share	$	—		$	(1.03)		$	1.03	*


(dollars in thousands)	North America			International			Corporate and Other			Consolidated
Net sales
Three months ended 9/30/20	$	280,668		$	217,959		$	—		$	498,627
Three months ended 9/30/19	271,701			210,375			—			482,076
$ change	$	8,967		$	7,584		n/a			$	16,551
% change	3.3		%	3.6		%	n/a			3.4		%

Operating income (loss)
Three months ended 9/30/20	$	33,256		$	(15,889)		$	(14,087)		$	3,280
Three months ended 9/30/19	15,132			9,107			(21,784)			2,455
$ change	$	18,124		$	(24,996)		$	7,697		$	825
% change	119.8		%	(274.5)		%	35.3		%	33.6		%

Operating income (loss) margin
Three months ended 9/30/20	11.8		%	(7.3)		%	n/a			0.7		%
Three months ended 9/30/19	5.6		%	4.3		%	n/a			0.5		%


	Three Months Ended September 30,				Change in
(amounts in thousands)	2020		2019		Dollars
Cash flows provided by (used in):
Operating activities from continuing operations	$	40,669	$	(3,581)	$	44,250
Investing activities from continuing operations	(7,728)		(13,164)		5,436
Financing activities from continuing operations	(35,959)		7,142		(43,101)
Effect of exchange rate changes on cash from continuing operations	2,500		(892)		3,392
Decrease in cash from continuing operations	(518)		(10,495)		9,977
Decrease in cash from discontinued operations	—		(8,509)		8,509
Net decrease in cash and cash equivalents	$	(518)	$	(19,004)	$	18,486


Period	(a) Total number of shares purchased (1)	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans	(d) Maximum number of shares that may yet be purchased under the plans (in millions of dollars) (2)
July 1, 2020 - July 31, 2020	12,517	$	31.47	—	$	189.8
August 1, 2020 - August 31, 2020	328,275	32.50		320,600	$	179.4
September 1, 2020 - September 30, 2020	960,407	32.92		960,407	$	147.8
Total	1,301,199	$	32.80	1,281,007


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of Amendment No. 1 to the Company’s Registration Statement on Form S-4 filed with the SEC on April 24, 2000).

3.2						Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2(b) of the Company’s Current Report on Form 8-K filed with the SEC on November 26, 2014).

3.3						Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 7, 2018).

4.1						Specimen of common stock certificate (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Company’s Registration Statement on Form S-4 filed with the SEC on April 24, 2000).

31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1						Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

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104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


		THE HAIN CELESTIAL GROUP, INC.
		(Registrant)

Date:	November 9, 2020	/s/ Mark L. Schiller
		Mark L. Schiller, President and Chief Executive Officer


Date:	November 9, 2020	/s/ Javier H. Idrovo
		Javier H. Idrovo, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)