Hain Celestial Group Inc 10-Q for FY2024 Q1

Hain Celestial Group Inc (HAIN)

10-Q 2023-11-07 For: 2023-09-30

Added on April 10, 2026

About this 10-Q

Hain Celestial Group Inc filed this 10-Q on November 7, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $425.03M; down 3.3% from $439.35M a year earlier
Net loss: $10.38M; compared with net income of $6.92M a year earlier
Diluted EPS: -$0.12; compared with $0.08 a year earlier

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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 Stock Market LLC


	Part I - Financial Information	Page

Item 1.	Financial Statements
	Consolidated Balance Sheets - September 30, 2023 and June 30, 2023	3
	Consolidated Statements of Operations - Three months ended September 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Loss - Three months ended September 30, 2023 and 2022	5
	Consolidated Statement of Stockholders’ Equity - Three months ended September 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows - Three months ended September 30, 2023 and 2022	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40

	Part II - Other Information

Items 3, and 4 are not applicable
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 5.	Other Information	47
Item 6.	Exhibits	42
Signatures		43


	September 30,		June 30,
	2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	38,280	$	53,364
Accounts receivable, less allowance for doubtful accounts of $3,018 and $2,750, respectively	158,094		160,948
Inventories	313,335		310,341
Prepaid expenses and other current assets	56,044		66,378

Total current assets	565,753		591,031
Property, plant and equipment, net	285,972		296,325
Goodwill	928,375		938,640
Trademarks and other intangible assets, net	290,867		298,105
Investments and joint ventures	12,298		12,798
Operating lease right-of-use assets, net	102,540		95,894
Other assets	31,091		25,846

Total assets	$	2,216,896	$	2,258,639
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	142,291	$	134,780
Accrued expenses and other current liabilities	96,731		88,520
Current portion of long-term debt	7,568		7,567


Total current liabilities	246,590		230,867
Long-term debt, less current portion	807,401		821,181
Deferred income taxes	61,006		72,086
Operating lease liabilities, noncurrent portion	97,165		90,014
Other noncurrent liabilities	23,740		26,584

Total liabilities	1,235,902		1,240,732
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none	—		—
Common stock - $.01 par value, authorized 150,000 shares; issued: 111,578 and 111,339 shares, respectively; outstanding: 89,628 and 89,475 shares, respectively	1,116		1,113
Additional paid-in capital	1,221,291		1,217,549
Retained earnings	642,185		652,561
Accumulated other comprehensive loss	(155,623)		(126,216)
	1,708,969		1,745,007
Less: Treasury stock, at cost, 21,950 and 21,864 shares, respectively	(727,975)		(727,100)
Total stockholders’ equity	980,994		1,017,907
Total liabilities and stockholders’ equity	$	2,216,896	$	2,258,639


	Three Months Ended September 30,
	2023		2022
Net sales	$	425,029	$	439,351
Cost of sales	341,086		345,016
Gross profit	83,943		94,335
Selling, general and administrative expenses	77,169		74,951
Productivity and transformation costs	6,403		773
Amortization of acquired intangible assets	1,955		2,788



Long-lived asset impairment	694		—
Operating (loss) income	(2,278)		15,823
Interest and other financing expense, net	13,244		7,677
Other income, net	(265)		(1,790)
(Loss) income from operations before income taxes and equity in net loss of equity-method investees	(15,257)		9,936
(Benefit) provision for income taxes	(5,379)		2,631
Equity in net loss of equity-method investees	498		382


Net (loss) income	$	(10,376)	$	6,923

Net (loss) income per common share:


Basic	$	(0.12)	$	0.08



Diluted	$	(0.12)	$	0.08

Shares used in the calculation of net (loss) income per common share:
Basic	89,512		89,307
Diluted	89,512		89,493


☒			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, 2023						September 30, 2022
	Pretax amount		Tax (expense) benefit		After tax amount		Pretax amount		Tax (expense) benefit		After tax amount
Net (loss) income					$	(10,376)					$	6,923

Other comprehensive loss:
Foreign currency translation adjustments before reclassifications	(32,933)		—		(32,933)		(67,149)		—		(67,149)

Change in deferred gains on cash flow hedging instruments	3,238		(794)		2,444		14,231		(3,638)		10,593
Change in deferred losses on fair value hedging instruments	(381)		94		(287)		(272)		69		(203)
Change in deferred gains on net investment hedging instruments	1,821		(452)		1,369		5,773		(1,476)		4,297

Total other comprehensive loss	$	(28,255)	$	(1,152)	$	(29,407)	$	(47,417)	$	(5,045)	$	(52,462)

Total comprehensive loss					$	(39,783)					$	(45,539)


	Common Stock			Additional							Accumulated Other
		Amount		Paid-in		Retained		Treasury Stock			Comprehensive
	Shares	at $.01		Capital		Earnings		Shares	Amount		Loss		Total
Balance at June 30, 2023	111,339	$	1,113	$	1,217,549	$	652,561	21,864	$	(727,100)	$	(126,216)	$	1,017,907
Net loss						(10,376)							(10,376)

Other comprehensive loss											(29,407)		(29,407)
Issuance of common stock pursuant to stock-based compensation plans	239	3											3
Employee shares withheld for taxes								86	(875)				(875)
Stock-based compensation expense				3,742									3,742
Balance at September 30, 2023	111,578	$	1,116	$	1,221,291	$	642,185	21,950	$	(727,975)	$	(155,623)	$	980,994


	September 30, 2023		June 30, 2023
Finished goods	$	199,043	$	192,007
Raw materials, work-in-progress, and packaging	114,292		118,334
	$	313,335	$	310,341


	September 30, 2023		June 30, 2023
Land	$	11,202	$	11,453
Buildings and improvements	53,926		55,354
Machinery and equipment	327,790		335,912
Computer hardware and software	53,658		54,192
Furniture and fixtures	20,301		20,722
Leasehold improvements	48,834		49,394
Construction in progress	13,889		10,816
	529,600		537,843
Less: Accumulated depreciation and impairment	243,628		241,518
	$	285,972	$	296,325


Leases	Classification	September 30, 2023		June 30, 2023
Assets
Operating lease ROU assets, net	Operating lease right-of-use assets, net	$	102,540	$	95,894

Finance lease ROU assets, net	Property, plant and equipment, net	268		289

Total leased assets		$	102,808	$	96,183

Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	10,152	$	10,489

Finance	Current portion of long-term debt	84		83

Non-current
Operating	Operating lease liabilities, noncurrent portion	97,165		90,014
Finance	Long-term debt, less current portion	200		222
Total lease liabilities		$	107,601	$	100,808


Fiscal Year	Operating leases		Finance leases		Total
2024 (remainder of year)	$	11,808	$	71	$	11,879
2025	14,261		93		14,354
2026	13,605		68		13,673
2027	13,307		53		13,360
2028	13,390		25		13,415
Thereafter	74,979		—		74,979
Total lease payments	141,350		310		141,660
Less: Imputed interest	34,033		26		34,059
Total lease liabilities	$	107,317	$	284	$	107,601


	North America		International		Total
Balance as of June 30, 2023	$	697,053	$	241,587	$	938,640




Translation	(1,001)		(9,264)		(10,265)
Balance as of September 30, 2023	$	696,052	$	232,323	$	928,375


	September 30, 2023		June 30, 2023
Non-amortized intangible assets:
Trademarks and tradenames(1)	$	246,529	$	250,860
Amortized intangible assets:
Other intangibles(2)	157,764		161,874
Less: Accumulated amortization	(113,426)		(114,629)
Net amortized intangible assets	44,338		47,245
Net other intangible assets	$	290,867	$	298,105


	Three Months Ended September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES


Net (loss) income	$	(10,376)	$	6,923
Adjustments to reconcile net (loss) income from operations to net cash provided by (used in) operating activities:
Depreciation and amortization	12,305		11,970
Deferred income taxes	(11,269)		(1,497)

Equity in net loss of equity-method investees	498		382
Stock-based compensation, net	3,742		3,994

Long-lived asset impairment	694		—
Loss (gain) on sale of assets	62		(60)

Other non-cash items, net	(556)		(1,457)
(Decrease) increase in cash attributable to changes in operating assets and liabilities:
Accounts receivable	(1,150)		(9,589)
Inventories	(7,423)		(16,907)
Other current assets	8,761		2,541
Other assets and liabilities	(3,198)		1,348
Accounts payable and accrued expenses	21,940		(2,764)
Net cash provided by (used in) operating activities	14,030		(5,116)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(6,906)		(7,215)

Investments and joint ventures, net	—		191
Proceeds from sale of assets	1,257		96

Net cash used in investing activities	(5,649)		(6,928)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under bank revolving credit facility	46,000		80,000
Repayments under bank revolving credit facility	(57,000)		(68,000)

Repayments under term loan	(1,875)		(1,875)

Payments of other debt, net	(3,834)		(72)


	Number of Shares and Units	Weighted Average Grant Date Fair Value (per share)
Non-vested RSAs, RSUs and PSUs outstanding at June 30, 2023	1,288	$	26.37
Granted	—	$	—
Vested	(239)	$	23.08
Forfeited	(23)	$	29.74
Non-vested RSAs, RSUs and PSUs outstanding at September 30, 2023	1,026	$	26.17


	Absolute TSR PSUs			Relative TSR PSUs
Grant date fair value (per target share)	$	20.18		$	27.47
Risk-free interest rate	3.54		%	3.54		%
Expected dividend yield	—			—
Expected volatility	40.30		%	26.60		%
Expected term	3.00 years			3.00 years


	Absolute TSR PSUs			Relative TSR PSUs
Grant date fair value (per target share)	$	13.84		$	19.54
Risk-free interest rate	4.28		%	4.28		%
Expected dividend yield	—			—
Expected volatility	40.70		%	28.20		%
Expected term	3.00 years			3.00 years


	Fiscal Year Ending June 30,
	2024 (remainder of year)		2025		2026		2027		2028
Estimated amortization expense	$	4,454	$	5,505	$	5,082	$	5,010	$	3,870


	September 30, 2023		June 30, 2023
Revolving credit facility	$	530,000	$	541,000
Term loans	286,875		288,750
Less: Unamortized issuance costs	(2,190)		(1,307)
Other borrowings(1)	284		305
	814,969		828,748
Short-term borrowings and current portion of long-term debt(2)	7,568		7,567
Long-term debt, less current portion	$	807,401	$	821,181



	Foreign Currency Translation Adjustment, Net		Deferred Gains on Cash Flow Hedging Instruments, Net		Deferred Gains on Fair Value Hedging Instruments, Net		Deferred Gains on Net Investment Hedging Instruments, Net		Total












Balance at June 30, 2022	$	(168,225)	$	519	$	500	$	2,724	$	(164,482)
Other comprehensive (loss) income before reclassifications	(67,149)		11,360		1,145		4,666		(49,978)
Amounts reclassified into income	—		(767)		(1,348)		(369)		(2,484)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2022(1)	(67,149)		10,593		(203)		4,297		(52,462)
Balance at September 30, 2022	$	(235,374)	$	11,112	$	297	$	7,021	$	(216,944)

Balance at June 30, 2023	$	(138,028)	$	10,898	$	685	$	229	$	(126,216)
Other comprehensive (loss) income before reclassifications	(32,933)		4,159		430		1,741		(26,603)
Amounts reclassified into income	—		(1,715)		(717)		(372)		(2,804)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2023(1)	(32,933)		2,444		(287)		1,369		(29,407)
Balance at September 30, 2023	$	(170,961)	$	13,342	$	398	$	1,598	$	(155,623)


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:

Derivative financial instruments	$	20,236	$	—	$	20,236	$	—


Liabilities:
Derivative financial instruments	$	901	—		$	901	—


Interest Rate Derivative	Number of Instruments	Notional Amount
Interest rate swap	4	$400,000


Foreign Currency Derivative	Number of Instruments	Notional Sold	Notional Purchased

Foreign currency forward contract	4	£3,467	€4,000


	Carrying Amount of the Hedged Asset				Cumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset

	September 30, 2023		June 30, 2023		September 30, 2023		June 30, 2023
Intercompany loan receivable	$	26,115	$	26,945	$	830	$	924


	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	$	8,964	Accrued expenses and other current liabilities	$	—
Interest rate swaps	Other noncurrent assets	8,855		Other noncurrent liabilities	—
Cross-currency swaps	Prepaid expenses and other current assets	2,376		Accrued expenses and other current liabilities	—
Cross-currency swaps	Other noncurrent assets	—		Other noncurrent liabilities	901
Foreign currency forward contracts	Prepaid expenses and other current assets	41		Other noncurrent liabilities	—
Total derivatives designated as hedging instruments		$	20,236		$	901


Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in AOCL on Derivatives				Location of Gain (Loss) Reclassified from AOCL into Income (Expense)	Amount of Gain (Loss) Reclassified from AOCL into Income (Expense)
	Three Months Ended September 30,					Three Months Ended September 30,
	2023		2022			2023		2022
Interest rate swaps	$	5,478	$	15,262	Interest and other financing expense, net	$	2,281	$	1,146
Cross-currency swaps	—		—		Interest and other financing expense, net / Other (income) expense, net	—		(115)
Foreign currency forward contracts	41		—		Cost of sales	—		—
	$	5,519	$	15,262		$	2,281	$	1,031


				Location and Amount of Gain (Loss) Recognized in the Consolidated Statements of Operations on Cash Flow Hedging Relationships
				Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
				Cost of sales		Interest and other financing expense, net			Cost of sales		Interest and other financing expense, net
The effects of cash flow hedging:
	Gain (Loss) on cash flow hedging relationships
		Interest rate swaps
			Amount of gain reclassified from AOCL into income	$	—	$	2,281		$	—	$	1,146

		Cross-currency swaps
			Amount of loss reclassified from AOCL into income	$	—	$	—		$	—	$	(115)


Derivatives in Fair value Hedging Relationships	Amount of Gain Recognized in AOCL on Derivatives				Location of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)	Amount of Gain Reclassified from AOCL into Income on Derivatives (Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,					Three Months Ended September 30,
	2023		2022			2023		2022

Cross-currency swaps	$	572	$	1,539	Interest and other financing expense, net	$	123	$	123

	$	572	$	1,539		$	123	$	123


				Location and Amount of Gain Recognized in the Consolidated Statements of Operations on Fair Value Hedging Relationships
				Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
				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 fair value hedging:
	Gain on fair value hedging relationships

		Cross-currency swaps
			Amount of gain reclassified from AOCL into income	$	—	$	953	$	—	$	—	$	123	$	1,688


Derivatives in Net Investment Hedging Relationships	Amount of Gain Recognized in AOCL on Derivatives				Location of Gain (Loss) Recognized in Income (Expense) on Derivatives (Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income (Expense) on Derivatives (Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,					Three Months Ended September 30,
	2023		2022			2023		2022
Cross-currency swaps	$	2,316	$	6,268	Interest and other financing expense, net	$	495	$	(495)


	Three Months Ended September 30, 2023


Corporate and Other	$	5,770
North America	3,358
International	595


	$	9,723


	Charges		Amounts Paid		Non-cash settlements/Adjustments2		Balance at September 30, 2023
Employee-related costs1	$	1,115	$	(46)	—		$	1,069
Contract termination costs	1,799		(1,528)		—		271
Asset write-downs2	1,521		—		(1,521)		—
Other transformation-related expenses3	5,288		(16)		—		5,272
	$	9,723	$	(1,590)	$	(1,521)	$	6,612


	Three Months Ended						Change in
	September 30, 2023			September 30, 2022			Dollars		Percentage
Net sales	$	425,029	100.0%	$	439,351	100.0%	$	(14,322)	(3.3)%
Cost of sales	341,086		80.3%	345,016		78.5%	(3,930)		(1.1)%
Gross profit	83,943		19.7%	94,335		21.5%	(10,392)		(11.0)%
Selling, general and administrative expenses	77,169		18.2%	74,951		17.1%	2,218		3.0%
Productivity and transformation costs	6,403		1.5%	773		0.2%	5,630		728.3%
Amortization of acquired intangible assets	1,955		0.5%	2,788		0.6%	(833)		(29.9)%
Long-lived asset impairment	694		0.2%	—		—%	694		100.0%

Operating (loss) income	(2,278)		(0.5)%	15,823		3.6%	(18,101)		*
Interest and other financing expense, net	13,244		3.1%	7,677		1.7%	5,567		72.5%
Other income, net	(265)		(0.1)%	(1,790)		(0.4)%	1,525		(85.2)%
(Loss) income from operations before income taxes and equity in net loss (income) of equity-method investees	(15,257)		(3.6)%	9,936		2.3%	(25,193)		*
(Benefit) provision for income taxes	(5,379)		(1.3)%	2,631		0.6%	(8,010)		*
Equity in net loss of equity-method investees	498		0.1%	382		0.1%	116		30.4%


Net (loss) income	$	(10,376)	(2.4)%	$	6,923	1.6%	$	(17,299)	*

Adjusted EBITDA	$	24,090	5.7%	$	36,029	8.2%	$	(11,939)	(33.1)%


Diluted net (loss) income per common share	$	(0.12)		$	0.08		$	(0.20)	*


(dollars in thousands)	North America			International			Corporate and Other			Consolidated
Net sales
Three months ended 9/30/23	$	260,054		$	164,975		$	—		$	425,029
Three months ended 9/30/22	288,396			150,955			—			439,351
$ change	$	(28,342)		$	14,020		n/a			$	(14,322)
% change	(9.8)		%	9.3		%	n/a			(3.3)		%

Adjusted EBITDA
Three months ended 9/30/23	$	18,727		$	17,438		$	(12,075)		$	24,090
Three months ended 9/30/22	30,781			14,947			(9,699)			36,029
$ change	$	(12,054)		$	2,491		$	(2,376)		$	(11,939)
% change	(39.2)		%	16.7		%	24.5		%	(33.1)		%






Adjusted EBITDA margin
Three months ended 9/30/23	7.2		%	10.6		%	n/a			5.7		%
Three months ended 9/30/22	10.7		%	9.9		%	n/a			8.2		%


	Three Months Ended September 30,				Change in
(amounts in thousands)	2023		2022		Dollars
Cash flows provided by (used in):
Operating activities	$	14,030	$	(5,116)	$	19,146
Investing activities	(5,649)		(6,928)		1,279
Financing activities	(17,584)		9,824		(27,408)
Decrease in cash and cash equivalents	(9,203)		(2,220)		(6,983)
Effect of exchange rate changes on cash and cash equivalents	(5,881)		(11,498)		5,617


Net decrease in cash and cash equivalents	$	(15,084)	$	(13,718)	$	(1,366)


Exhibit Number						Description

3.1						Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the SEC on August 26, 2021).

3.2						The Hain Celestial Group, Inc. Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the SEC on May 9, 2023).

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

10.1						Second Amendment, dated August 22, 2023, to the Fourth Amended and Restated Credit Agreement, dated December 22, 2021, by and among the Company, the Lenders party thereto and Bank of America, N.A., as administrative agent.

10.2						Offer Letter, dated August 23, 2023, between the Company and Lee A. Boyce.


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.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

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


		THE HAIN CELESTIAL GROUP, INC.
		(Registrant)

Date:	November 7, 2023	/s/ Wendy P. Davidson
		Wendy P. Davidson, President and Chief Executive Officer (Principal Executive Officer)