Debt-heavy Hain Celestial (NASDAQ: HAIN) warns on going concern after $136.6M loss
Rhea-AI Filing Summary
The Hain Celestial Group, Inc. reports weaker results for the quarter and six months ended December 31, 2025, with net sales of
Hain Celestial faces significant balance sheet pressure. Total assets fell to
The company generated
Positive
Positive – Operating cash generation and liquidity actions: Despite losses, Hain Celestial generated
$28,488 of net cash from operating activities in the six months endedDecember 31, 2025 , received$25,900 from an insurance claim inJanuary 2026 , and is using these funds to repay revolver borrowings.Positive – Deleveraging via asset sale: On
January 30, 2026 , the company signed a definitive agreement to sell its North American Snacks business for$115,000 in cash, with net proceeds designated to repay a portion of its term loans, supporting near‑term debt reduction.
Negative
Negative – Significant net losses and impairments: For the six months ended
December 31, 2025 , Hain Celestial reported a net loss of$136,631 , including goodwill impairments totaling$119,908 and an$11,917 trademark impairment, reflecting weaker projected performance in key U.S. and U.K. reporting units.Negative – Going‑concern uncertainty and high leverage: The company has
$705,800 of debt maturing onDecember 22, 2026 and acknowledges “substantial doubt” about its ability to continue as a going concern, given limited liquidity and the absence of a completed refinancing or extension.Negative – Shrinking equity base: Total stockholders’ equity declined from
$475,005 atJune 30, 2025 to$330,245 atDecember 31, 2025 , due to cumulative losses and impairment charges, reducing balance sheet flexibility.
Insights
Hain Celestial’s rising losses and looming 2026 debt maturities, plus a formal going‑concern warning, materially increase financial risk.
Hain Celestial is experiencing operating pressure and heavy non‑cash charges. For the six months ended
The balance sheet is highly leveraged. The company has
Management is executing a strategic review, including asset sales and working capital initiatives. It received
Table of Contents
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.
Large 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 February 3, 2026, there were
Table of Contents
THE HAIN CELESTIAL GROUP, INC.
Index
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Part I - Financial Information |
Page |
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Item 1. |
Financial Statements |
3 |
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Consolidated Balance Sheets - December 31, 2025 and June 30, 2025 |
3 |
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Consolidated Statements of Operations - Three and six months ended December 31, 2025 and 2024 |
4 |
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Consolidated Statements of Comprehensive Loss - Three and six months ended December 31, 2025 and 2024 |
5 |
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Consolidated Statement of Stockholders’ Equity - Three and six months ended December 31, 2025 and 2024 |
6 |
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Consolidated Statements of Cash Flows - Six months ended December 31, 2025 and 2024 |
8 |
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Notes to Consolidated Financial Statements |
9 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
35 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
54 |
Item 4. |
Controls and Procedures |
54 |
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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. |
Legal Proceedings |
56 |
Item 1A. |
Risk Factors |
56 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
56 |
Item 5. |
Other Information |
56 |
Item 6. |
Exhibits |
57 |
Signatures |
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59 |
1
Table of Contents
Forward-Looking Statements
This Quarterly Report on Form 10-Q for the quarter ended December 31, 2025 (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; our supply chain, including the impact of tariffs and 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; changes to consumer preferences; our ability to execute our business strategy; the ability to satisfy the conditions to the closing of the contemplated disposition of our North American Snacks business, which may include conditions outside of our control; our ability to successfully separate the North American Snacks business and realize the benefits of the contemplated disposition; compliance with our credit agreement and our ability to refinance, retire and/or extend the maturity of the Company’s existing debt; our ability to manage our supply chain effectively; input cost inflation, including as a result of tariffs; reliance on independent contract manufacturers; disruption of operations at our manufacturing facilities; customer concentration; reliance on independent distributors; risks associated with operating internationally; risks associated with outsourcing arrangements; risks associated with geopolitical conflicts or events; 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; foreign currency exchange risk; general economic conditions; 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; cybersecurity incidents; disruptions to information technology systems; 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; our ability to manage our financial reporting and internal control systems and processes; compliance with data privacy laws; the adequacy of our insurance coverage; climate impacts; liabilities, claims or regulatory change with respect to environmental matters; 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
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, 2025 AND JUNE 30, 2025
(In thousands, except par values)
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December 31, |
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June 30, |
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2025 |
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2025 |
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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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Assets held for sale |
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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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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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Liabilities related to assets held for sale |
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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 (deficit) 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
Table of Contents
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED December 31, 2025 AND 2024
(In thousands, except per share amounts)
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Three Months Ended December 31, |
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Six Months Ended December 31, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net sales |
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$ |
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$ |
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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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Goodwill impairment |
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Intangibles and long-lived asset impairment |
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Productivity and transformation costs |
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Amortization of acquired intangible assets |
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Proceeds from insurance claim |
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Operating loss |
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Interest and other financing expense, net |
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Other (income) expense, net |
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Loss before income taxes and equity in net loss of equity-method investees |
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Provision 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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$ |
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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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$ |
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$ |
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Diluted |
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$ |
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$ |
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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
Table of Contents
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED December 31, 2025 AND 2024
(In thousands)
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Three Months Ended |
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December 31, 2025 |
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December 31, 2024 |
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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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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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Change in deferred (losses) gains on net investment hedging instruments |
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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 loss |
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$ |
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Six Months Ended |
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December 31, 2025 |
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December 31, 2024 |
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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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Other comprehensive (loss) income: |
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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 on cash flow hedging instruments |
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( |
) |
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( |
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( |
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( |
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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 gains on net investment hedging instruments |
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Total other comprehensive 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 loss |
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$ |
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See notes to consolidated financial statements.
5
Table of Contents
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED December 31, 2025
(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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(Deficit) 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, 2025 |
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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, 2025 |
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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 income |
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Issuance of common stock pursuant to stock-based compensation plans |
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( |
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|
|
|
|
( |
) |
||||||
Employee shares withheld for taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
See notes to consolidated financial statements.
6
Table of Contents
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2024
(In thousands, except par values)
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||||
|
|
|
|
|
Amount |
|
|
Paid-in |
|
|
Retained |
|
|
Treasury Stock |
|
|
Comprehensive |
|
|
|
|
|||||||||||
|
|
Shares |
|
|
at $ |
|
|
Capital |
|
|
Earnings |
|
|
Shares |
|
|
Amount |
|
|
Loss |
|
|
Total |
|
||||||||
Balance at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Issuance of common stock pursuant to stock-based compensation plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Employee shares withheld for taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||||
Issuance of common stock pursuant to stock-based compensation plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Employee shares withheld for taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
See notes to consolidated financial statements.
7
Table of Contents
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED December 31, 2025 AND 2024
(In thousands)
|
|
Six Months Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Equity in net loss of equity-method investees |
|
|
|
|
|
|
||
Stock-based compensation, net |
|
|
|
|
|
|
||
Goodwill impairment |
|
|
|
|
|
|
||
Intangibles and long-lived asset impairment |
|
|
|
|
|
|
||
(Gain) loss on sale of assets |
|
|
( |
) |
|
|
|
|
Other non-cash items, net |
|
|
|
|
|
( |
) |
|
(Decrease) increase in cash attributable to changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
|
|
|
|
||
Other current assets |
|
|
( |
) |
|
|
( |
) |
Other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Purchases of property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
||
Investments and joint ventures, net |
|
|
|
|
|
|
||
Net cash (used in) provided by investing activities |
|
|
( |
) |
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Borrowings under bank revolving credit facility |
|
|
|
|
|
|
||
Repayments under bank revolving credit facility |
|
|
( |
) |
|
|
( |
) |
Repayments under term loan |
|
|
( |
) |
|
|
( |
) |
Payments of other debt, net |
|
|
( |
) |
|
|
( |
) |
Employee shares withheld for taxes |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash |
|
|
( |
) |
|
|
( |
) |
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
See notes to consolidated financial statements.
8
Table of Contents
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, and meal preparation 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® Organic and Ella’s Kitchen® baby and kids foods, Celestial Seasonings® teas, Joya® and Natumi® plant-based beverages, The Greek Gods® yogurt, Cully & Sully®, Yorkshire Provender®, New Covent Garden® and Imagine® soups, among others.
Strategic Review
We are focused on five actions to win in the marketplace and drive growth: aggressively streamlining our portfolio, accelerating brand renovation and innovation, implementing price increases along with broader revenue growth management, driving productivity and working capital efficiency, and enhancing our digital capabilities, inclusive of ecommerce.
During the fourth quarter of fiscal year 2025, we announced that our Board of Directors was conducting a comprehensive review of the Company’s portfolio with the assistance of our independent financial advisor.
As part of this review, on January 30, 2026, the Company entered into a definitive agreement to sell its North American Snacks business, including Garden Veggie Snacks™, Terra® chips and Garden of Eatin’® snacks as well as certain private label products (the “North American Snacks Business”) for $
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, 2025 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2025 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the three and six months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30,
9
Table of Contents
2026. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2025 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.
Going Concern and Management’s Plan
As of December 31, 2025, the Company had $
As discussed above, the Company announced that its Board of Directors commenced a strategic review of the Company’s business and capital structure, in part to evaluate options to improve liquidity and reduce leverage. As part of this review, on January 30, 2026, the Company entered into a definitive agreement to sell its North American Snacks Business for $
The Company and the Board of Directors remain focused on completing the strategic review and taking decisive actions to strengthen the Company’s financial flexibility, improve performance and address the upcoming debt maturity under the Credit Agreement. These actions include a continued review of the Company’s portfolio and the pursuit of further asset sales to refine the Company’s operating model with a focus on categories and platforms in key markets. In addition, management is executing targeted inventory and other working capital optimization initiatives designed to improve the Company’s cash conversion and enhance liquidity. The Company also continues to have active engagement with its lenders, assess opportunities to refinance the Company’s debt or extend the maturity under the Credit Agreement, and evaluate potential capital raising or other strategic transactions.
The Company believes that the successful execution of these plans will enable the Company to refinance and/or retire the existing debt prior to its maturity or extend the maturity date under the Credit Agreement. However, Accounting Standards Codification (“ASC”) 205-40, “Presentation of Financial Statements - Going Concern” requires that management not conclude that such an outcome is “probable” if, among other factors, the outcome is not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least one year following the date of issuance of these financial statements due to the uncertainty regarding the Company’s ability to refinance or repay its debt due on December 22, 2026 because no such refinancing, retirement or extension has occurred prior to the issuance of the financial statements. The Company’s ability to continue as a going concern remains subject to successful execution of its strategic plan and securing additional financing, if needed. If the Company is unable to execute its plans to generate sufficient liquidity, it may not have adequate resources to repay or refinance its debt, which would have a material adverse effect on the Company’s financial position and results of operations.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and no adjustments have been made to the financial statements to reflect the possibility of the Company’s inability to meet its debt obligations or continue as a going concern.
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.
10
Table of Contents
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 Adopted Accounting Pronouncements
There have been no new accounting standards adopted since the filing of the Form 10-K for the fiscal year ended June 30, 2025 that have significance, or potential significance, to the interim condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the ASC and to make other incremental improvements to U.S. GAAP. The update represents changes that clarify, correct errors in or make other minor improvements to a broad range of topics that is intended to make it easier to understand and apply, including ASC 260, “Earnings Per Share”, ASC 325, “Investments – Other”, and ASC 958, “Not-for-Profit Entities”. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). ASU 2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. The amendments are effective for interim reporting periods within annual reporting periods 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.
On November 25, 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements” (“ASU 2025-09”). ASU 2025-09 clarifies the application of previous hedge accounting guidance and addresses emerging issues identified by stakeholders, including those related to reference rate reform. The main amendments relate to cash flow hedging, but some of the amendments affect certain fair value and net investment hedges. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07 “Derivatives and Hedging and Revenue from Contracts with Customers, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606)”. The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) — Targeted Improvements to the Accounting for Internal-Use Software”, which modernizes the guidance in ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software, to better align with current software development practices,
11
Table of Contents
including agile methodologies. The amendments are effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which will provide a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses: all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments are effective for fiscal years beginning after December 15, 2025 and for interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In November 2024, the FASB issued 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.
The following table sets forth the computation of basic and diluted net loss per share on the consolidated statements of operations:
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted net loss per common share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
During the third quarter of fiscal year 2025, the Company announced that it was exploring strategic alternatives regarding its personal care (“PC”) business to focus on its portfolio of better-for-you food and beverages. The Company determined that its PC business was held for sale and ascribed an aggregate $
During the three months ended December 31, 2025, the Company substantially completed the exit of the Yves Veggie Cuisine® plant-based business in Canada (“Yves”) and accordingly classified its remaining property, plant and equipment, net, with a remaining carrying value of $
12
Table of Contents
The following table presents the major classes of assets and liabilities of the PC business and Yves classified as held for sale:
|
|
December 31, |
|
|
June 30, 2025 |
|
||
ASSETS |
|
|
|
|
|
|
||
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Other noncurrent assets |
|
|
|
|
|
|
||
Operating lease right-of-use assets, net |
|
|
|
|
|
|
||
Allowance for reduction of assets held for sale |
|
|
( |
) |
|
|
( |
) |
Assets held for sale |
|
$ |
|
|
$ |
|
||
LIABILITIES |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Liabilities held for sale |
|
$ |
|
|
$ |
|
||
ParmCrisps®
On August 30, 2024, the Company completed the sale of its ParmCrisps® business for total cash consideration of $
Inventories consisted of the following:
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Raw materials, work-in-progress, and packaging |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Property, plant and equipment, net consisted of the following:
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Computer hardware and software |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
13
Table of Contents
Depreciation expense for the three months ended December 31, 2025 and 2024 was $
As of December 31, 2025, the Company reclassified $
During the three and six months ended December 31, 2024, the Company recognized a non-cash impairment charge of $
During the three and six months ended December 31, 2024, the Company recognized a $
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. 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. The 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 and six months ended December 31, 2025 and 2024 were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||||
Operating lease expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Finance lease expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable lease expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term lease expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Goodwill
The following table provides the changes in the carrying value of goodwill by reportable segment:
|
|
North |
|
|
International |
|
|
Total |
|
|||
Balance as of June 30, 2025(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Impairment charge |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Translation |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance as of December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
As of December 31, 2025, the Company performed an assessment of factors to determine whether it was more likely than not that the fair value of each reporting unit within both of the North America and International reportable segments was less than its respective carrying amount, including goodwill. As a result of a continued decline in the projected performance and cash flows of the U.S. reporting unit, and in connection with the pending agreement to sell its North American Snacks Business, the Company completed an interim quantitative impairment test of goodwill. As a result of the recognition of an intangible asset impairment
14
Table of Contents
charge within the United Kingdom (“U.K.”) reporting unit in the International reportable segment and a continued decline in the projected performance and cash flows of the U.K. reporting unit, the Company also completed an interim quantitative impairment test of goodwill. For the Western Europe and Ella’s Kitchen UK reporting units, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount, including goodwill. The Company concluded that the qualitatively tested reporting units’ estimated fair values exceeded their carrying amounts.
In performing the quantitative tests for the U.S. and U.K., the fair values were estimated using the Discounted Cash Flow (“DCF”) method income approach as such method was determined to be more representative of future performance from a market participant point of view. As of December 31, 2025, the U.S. reporting unit’s carrying amount exceeded its estimated fair value of $
The goodwill related to the U.S. and U.K. reporting units remains at risk of potential impairment if the fair value of these reporting units, and their associated assets, decrease in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company’s estimates. If the Company’s ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record additional impairment charges in future periods.
During the three months ended December 31, 2024, the Company recognized a non-cash impairment charge of $
Other Intangible Assets
The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||
Non-amortized intangible assets: |
|
|
|
|
|
|
||
Trademarks and tradenames(1) |
|
$ |
|
|
$ |
|
||
Amortized intangible assets: |
|
|
|
|
|
|
||
Other intangibles(2) |
|
|
|
|
|
|
||
Less: Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Net amortized intangible assets |
|
|
|
|
|
|
||
Net other intangible assets |
|
$ |
|
|
$ |
|
||
During the three months ended December 31, 2025, as a result of a continued decline in net sales driven by industry-wide volume softness for purees within the U.K., the Company conducted an interim quantitative impairment test for its Ella’s Kitchen® baby and kids foods indefinite-lived tradename. The Company concluded that the indefinite-lived intangible asset estimated fair value exceeded its carrying amount by
15
Table of Contents
During the three months ended December 31, 2025, as a result of continued decline in net sales, the Company conducted an interim quantitative impairment test for the Hartley’s® jelly indefinite-lived tradename. The Company concluded that the indefinite-lived tradename carrying amount exceeded its estimated fair value. During the three months ended December 31, 2025, the Company recorded a non-cash impairment charge of $
The Ella’s Kitchen® baby and kids foods, Hartley’s® jelly, Sensible Portions®, and Spectrum® indefinite-lived tradenames remain at risk of impairment in future periods in the event of unfavorable changes in assumptions, including forecasted future cash flows based on execution of strategic initiatives for increasing revenue, as well as discount rates and other macroeconomic factors. The Sensible Portions® and Spectrum® intangible assets, which were quantitatively tested in the prior year, are part of the North America reportable segment and have remaining carrying value of $
During the three months ended December 31, 2024, the Company recorded a non-cash impairment charge of $
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:
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Amortization of acquired intangibles |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Debt and borrowings consisted of the following:
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||
Revolving credit facility |
|
$ |
|
|
$ |
|
||
Term loans |
|
|
|
|
|
|
||
Less: Unamortized issuance costs |
|
|
( |
) |
|
|
( |
) |
Finance lease obligations |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Current debt and finance lease obligations(1) |
|
|
|
|
|
|
||
Long-term debt and finance lease obligations, less current portion |
|
$ |
|
|
$ |
|
||
Amended and Restated Credit Agreement
On December 22, 2021, the Company entered into a Fourth Amended and Restated Credit Agreement (as subsequently amended, the “Credit Agreement”). The Credit Agreement originally provided for senior secured financing of $
16
Table of Contents
domestic subsidiaries, including the equity interest in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions.
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. On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be
From the date of the Second Amendment until the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) the Secured Overnight Financing Rate plus a credit spread adjustment of
On May 5, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. Pursuant to the Third Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be
Commencing on the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) Term SOFR plus
The Third Amendment also reduced the size of the Revolver from $
On September 11, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. Pursuant to the Fourth Amendment, (x) the Company’s maximum consolidated secured leverage ratio was amended to be
Commencing on the date of the Fourth Amendment, loans under the Credit Agreement bear interest at (a) Term SOFR plus
The Fourth Amendment also reduced the size of the Revolver from $
Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2025 was
As of December 31, 2025, there were $
17
Table of Contents
of December 31, 2025 and June 30, 2025, $
Credit Agreement Issuance Costs
In connection with the Fourth Amendment to its Credit Agreement during the first quarter of fiscal year 2026, the Company incurred debt issuance costs of approximately $
Interest paid during the three and six months ended December 31, 2025 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 it has done for certain jurisdictions for the quarter ended December 31, 2025. 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
18
Table of Contents
The following table presents the changes in accumulated other comprehensive loss (“AOCL”):
|
|
Foreign |
|
|
Deferred |
|
|
Deferred (Losses) Gains on |
|
|
Deferred |
|
|
Total |
|
|||||
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Amounts reclassified into (income) expense |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net change in accumulated other comprehensive income (loss) for the three months ended September 30, 2024(1) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at September 30, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Other comprehensive (loss) income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amounts reclassified into income |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net change in accumulated other comprehensive (loss) income for the three months ended December 31, 2024(1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at December 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at June 30, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Other comprehensive (loss) income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Amounts reclassified into income |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2025(1) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at September 30, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Other comprehensive income before reclassifications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Amounts reclassified into income |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net change in accumulated other comprehensive income (loss) for the three months ended December 31, 2025(1) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at December 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The Company maintains a stockholder-approved plan, The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan (as amended, the “2022 Plan”), which was approved at the Company’s 2022 Annual Meeting of Shareholders held on November 17, 2022, and further amended at each of the Company’s 2024 Annual Meeting of Shareholders held on October 31, 2024 and the Company’s 2025 Annual Meeting of Stockholders held on October 30, 2025. The 2022 Plan permits the Company to continue making equity-based and other incentive awards in a manner intended to properly incentivize its employees, directors, consultants and other service providers by aligning their interests with the interests of the Company’s stockholders. The 2022 Plan is administered by the Compensation Committee of the Company’s Board of Directors. The Company also historically granted shares under its Amended and Restated 2002 Long-Term Incentive and Stock Award Plan and its 2019 Equity
19
Table of Contents
Inducement Award Program. The Company’s long-term incentive program (“LTIP”) is described in Note 14, Stock-Based Compensation and Incentive Performance Plans, in the Notes to the Consolidated Financial Statements in the Form 10-K.
In the second quarter of fiscal 2025, a form of awards was granted to employees that can be settled in cash or stock, at the Company’s discretion. These awards are accounted for as liability-based equity awards since the Company has the ability and intent to settle such awards in cash.
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 December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Selling, general and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based awards |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash-settled awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total selling, general and administrative expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Related income tax benefit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock-Based Award Activity
Stock-based awards are generally issued in the form of restricted share units (“RSUs”), which are service-based awards, and performance share units (“PSUs”) that are subject to the achievement of minimum market conditions or performance goals. RSU awards to employees generally provide for vesting in equal annual installments over a period of three years, with different vesting periods in certain cases. RSU awards to non-employee directors generally provide for a vesting period of one year. For PSU awards, the following share figures are stated at target levels, and the awards outstanding as of December 31, 2025 generally provide for vesting at
|
|
Number of Shares |
|
|
Weighted |
|
||
Non-vested RSUs and PSUs outstanding at June 30, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Non-vested RSUs and PSUs outstanding at December 31, 2025 |
|
|
|
|
$ |
|
||
The fair value of RSUs and PSUs granted and of shares vested, and the tax benefit recognized from restricted shares vesting was as follows:
|
|
Six Months Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Fair value of RSUs and PSUs granted |
|
$ |
|
|
$ |
|
||
Fair value of shares vested |
|
$ |
|
|
$ |
|
||
Tax benefit recognized from restricted shares vesting |
|
$ |
|
|
$ |
|
||
At December 31, 2025, there was $
20
Table of Contents
Cash-Settled Award Activity
The Company grants cash-settled awards that are either service-based or subject to the achievement of minimum market conditions or performance goals. Service-based cash awards generally provide for vesting in equal annual installments over a period of three years, with different vesting periods in certain cases. For cash awards tied to minimum market conditions or performance goals, award amounts are stated at target levels with vesting at
The fair value of these cash-settled awards is measured at each reporting period until the awards are settled. The performance-based cash-settled award liability at December 31, 2025 was recorded ratably based on the Company's projected achievement at the end of the measurement period. The cash incentive award liability was $
During the six months ended December 31, 2025, the estimated fair value of granted cash-settled awards was $
At December 31, 2025, there was $
CEO Grant
In connection with her appointment as Interim President and Chief Executive Officer, Alison Lewis received a one-time grant of
On December 15, 2025, Ms. Lewis received a grant under the LTIP for a total of
The RSUs will vest one-third each year on the anniversary of the start date, subject to her continued employment.
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:
21
Table of Contents
The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2025:
|
|
Total |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2025:
|
|
Total |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
There were
Derivative Instruments
The Company uses interest rate swaps to manage interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage exposure to currency fluctuations. These instruments are valued using techniques like DCF analysis, which considers the contractual terms and market-based inputs such as interest rate curves and implied volatilities. The fair values of interest rate swaps are determined by netting the discounted future fixed and variable cash flows. The variable cash flows are based on expected future interest rates.
Credit valuation adjustments are made to reflect the nonperformance risk of both the Company and its counterparties. Most inputs used to value derivatives fall within Level 2 of the fair value hierarchy, but credit valuation adjustments use Level 3 inputs, such as current credit spreads. The impact of these adjustments was not significant to the overall valuation, so all derivatives as of December 31, 2025 and June 30, 2025 were classified as Level 2.
Nonrecurring Fair Value Measurements
The Company measures certain non-financial assets, such as goodwill, indefinite and definite lived intangible assets, and long-lived assets (property and equipment, and right-of-use lease assets), at fair value on a nonrecurring basis. These assets are initially measured at fair value at the time of acquisition or purchase, with adjustments only for foreign currency translation. Periodically, these assets are tested for impairment by comparing their carrying values to their estimated fair values. If an asset is impaired, the Company recognizes an impairment expense equal to the excess of the carrying value over the estimated fair value.
For indefinite-lived intangible assets, fair value is determined using the relief from royalty approach, considering factors like future growth, royalty rates, discount rates, and other variables. Fair value measurements for reporting units where goodwill resides are estimated using the Discounted Cash Flow (“DCF”) method income approach, which involve significant management judgment and Level 3 inputs, such as economic conditions and customer demand. For long-lived assets, the Company compares the fair value of the assets to their carrying value utilizing a valuation technique commensurate with the underlying assets. These measurements are performed at least annually for impairment testing. The Company bases its fair value estimates on reasonable assumptions but acknowledges their unpredictability and inherent uncertainty.
22
Table of Contents
During the three and six months ended December 31, 2025, the Company recorded non-cash impairment charges of $
During the three and six months ended December 31, 2025, the Company conducted an interim quantitative impairment test for its Ella’s Kitchen® baby and kids foods and Hartley’s® jelly indefinite-lived tradenames and recorded a non-cash impairment charge of $
During the three and six months ended December 31, 2024, the Company recorded a non-cash impairment charge of $
During the three and six months ended December 31, 2024, the Company recorded non-cash impairment charges of $
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposures to a wide variety of business and operational risks. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s receivables and borrowings.
Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of its functional currency, the U.S. Dollar. Accordingly, the Company uses derivative financial instruments to manage and mitigate such risks. The Company does not use derivatives for speculative or trading purposes.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During the three and six months ended December 31, 2025 and 2024, such derivatives were used to hedge the variable cash flows associated with existing variable rate debt.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCL related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. During the next 12 months, the Company estimates that an additional $
23
Table of Contents
As of December 31, 2025, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative |
|
Number of Instruments |
|
Notional Amount |
|
|
Interest rate swap |
|
|
$ |
|
||
Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to fluctuations in various foreign currencies against its functional currency, the U.S. Dollar. The Company, at times, uses forward contracts to manage its exposure to fluctuations in the GBP-EUR exchange rates. The Company designates these derivatives as cash flow hedges of foreign exchange risks.
For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in AOCL and subsequently reclassified in the same period during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next 12 months, the Company estimates that an additional $
As of December 31, 2025, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risks:
Foreign Currency Derivative |
|
Number of Instruments |
|
Notional Sold |
|
|
Notional Purchased |
|
||
Foreign currency forward contract |
|
|
£ |
|
|
€ |
|
|||
Net Investment Hedges
The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities and their exposure to the Euro. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Western Europe. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in U.S. Dollars for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency- fixed-rate payments over the life of the agreement.
For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCL as part of the cumulative translation adjustment. Amounts are reclassified out of AOCL into earnings when the hedged net investment is either sold or substantially liquidated.
As of December 31, 2025, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:
Foreign Currency Derivative |
|
Number of Instruments |
|
Notional Sold |
|
|
Notional Purchased |
|
||
Cross-currency swap |
|
|
€ |
|
|
$ |
|
|||
Fair Value Hedges
The Company is exposed to changes in the fair value of certain of its foreign denominated intercompany loans due to changes in foreign exchange spot rates. The Company uses fixed-to-fixed cross-currency swaps to hedge its exposure to changes in foreign exchange rates affecting gains and losses on intercompany loan principal and interest. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement.
For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest and other financing expense, net.
24
Table of Contents
Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company’s accounting policy election. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction.
As of December 31, 2025, the Company had the following outstanding foreign currency derivatives that were used to hedge changes in fair value attributable to foreign exchange risk:
Foreign Currency Derivative |
|
Number of Instruments |
|
Notional Sold |
|
|
Notional Purchased |
|
||
Cross-currency swap |
|
|
€ |
|
|
$ |
|
|||
As of December 31, 2025 and June 30, 2025, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustment for fair value hedges:
|
|
Carrying Amount of the Hedged Asset |
|
|
Cumulative Amount of Fair Value Hedge Adjustment Included in the Carrying Amount of the Hedged Asset |
|
||||||||||
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||||
Intercompany loan receivable |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Designated Hedges
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of December 31, 2025:
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
||||||
|
|
Balance Sheet |
|
Fair Value |
|
|
Balance Sheet |
|
Fair Value |
|
||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
||
Interest rate swaps |
|
Prepaid expenses and other current assets |
|
$ |
|
|
Accrued expenses and other current liabilities |
|
$ |
|
||
Cross-currency swaps |
|
Prepaid expenses and other current assets |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
|
||
Foreign currency forward contracts |
|
Prepaid expenses and other current assets |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
|
||
Total derivatives designated as hedging instruments |
|
|
|
$ |
|
|
|
|
$ |
|
||
25
Table of Contents
The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of June 30, 2025:
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
||||||
|
|
Balance Sheet |
|
Fair Value |
|
|
Balance Sheet |
|
Fair Value |
|
||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
||
Interest rate swaps |
|
Prepaid expenses and other current assets |
|
$ |
|
|
Accrued expenses and other current liabilities |
|
$ |
|
||
Interest rate swaps |
|
Other noncurrent assets |
|
|
|
|
Other noncurrent liabilities |
|
|
|
||
Cross-currency swaps |
|
Prepaid expenses and other current assets |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
|
||
Cross-currency swaps |
|
Other noncurrent assets |
|
|
|
|
Other noncurrent liabilities |
|
|
|
||
Foreign currency forward contracts |
|
Prepaid expenses and other current assets |
|
|
|
|
Accrued expenses and other current liabilities |
|
|
|
||
Total derivatives designated as hedging instruments |
|
|
|
$ |
|
|
|
|
$ |
|
||
26
Table of Contents
The following table presents the pre-tax effect of the Company’s cash flow hedges, net investment hedges, and fair value hedges on AOCL for the three and six months ended December 31, 2025 and 2024:
|
|
Amount of Gain (Loss) Recognized in AOCL on Derivatives |
|
|||||||||||||
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Derivatives in cash flow hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Foreign currency forward contracts |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Derivatives in net investment hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives in fair value hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents the pre-tax effect of the Company’s cash flow hedges, net investment hedges, and fair value hedges on the consolidated statements of operations, recorded in interest and other financing expense, net, for the three and six months ended December 31, 2025 and 2024:
|
|
Amount of Gain (Loss) Reclassified from AOCL into Income (Expense) |
|
|||||||||||||
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Derivatives in cash flow hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other financing expense, net: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cross-currency swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Derivatives in net investment hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives in fair value hedging relationships: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cross-currency swaps(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Non-Designated Hedges
Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.
During the three and six months ended December 31, 2025, the Company entered into auto-cancellable Target Redemption Forward (“TARF”) contracts to buy up to €
27
Table of Contents
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
||||||
|
|
Balance Sheet |
|
Fair Value |
|
|
Balance Sheet |
|
Fair Value |
|
||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
||
Target Redemption Forward |
|
Prepaid expenses and other current assets |
|
$ |
|
|
Accrued expenses and other current liabilities |
|
$ |
|
||
During the first quarter of fiscal year 2024, the Company began a multi‑year restructuring program (the “Restructuring Program”) and incurred charges related to contract terminations, asset write‑downs, employee‑related costs, and other transformation-related expenses.
For the three months ended December 31, 2025, expenses associated with the Restructuring Program in the amount of $
For the six months ended December 31, 2025, expenses associated with the Restructuring Program in the amount of $
The table below sets forth expenses associated with the Restructuring Program for the three and six month periods ended December 31, 2025 and December 31, 2024 by reportable segments and Corporate and Other.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table displays the activities and liability balances relating to the Restructuring Program for the period ended as of December 31, 2025. The Company expects to pay substantially all remaining accrued restructuring costs during the next 12 months and the program is expected to conclude by fiscal year 2027.
|
|
Balance at |
|
|
Charges |
|
|
Amounts |
|
|
Non-cash settlements/ |
|
|
Balance at |
|
|||||
Employee-related costs(1) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Contract termination costs |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Asset write-downs(2) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Other transformation-related expenses(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
(1)
(2)
(3)
28
Table of Contents
Securities Class Actions Filed in Federal Court
The Company and certain of its former officers (collectively, the “Defendants”) are defendants in a consolidated class action complaint in the Eastern District of New York under the caption In re The Hain Celestial Group, Inc. Securities Litigation (the “Consolidated Securities Action”). A Corrected Consolidated Amended Complaint was filed in the summer of 2017, which asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegedly materially false or misleading statements and omissions in public statements, press releases and SEC filings regarding the Company’s business, prospects, financial results and internal controls.
After Defendants’ initial motion to dismiss was granted without prejudice to replead in October 2017, the Co-Lead Plaintiffs filed a Second Amended Consolidated Class Action Complaint on May 6, 2019 (the “Second Amended Complaint”), which made allegations similar to those in the previous complaint. After several years of motion practice and related court orders, on September 29, 2023, the District Court granted Defendants’ Motion to Dismiss the Second Amended Complaint. Co-Lead Plaintiffs filed a notice of appeal on October 26, 2023, appealing the District Court’s decision dismissing the Second Amended Complaint to the Second Circuit, and the appeal was fully briefed as of June 3, 2024. On September 29, 2025, the Second Circuit reversed and remanded the matter for further proceedings. The matter is now proceeding in the district court and the Company answered the Second Amended Complaint on January 27, 2026.
Additional Stockholder Class Action and Derivative Complaints Filed in Federal Court
The former Board of Directors and certain former officers of the Company are defendants in a consolidated action, originally filed in 2017 in the Eastern District of New York, under the caption In re The Hain Celestial Group, Inc. Stockholder Class and Derivative Litigation (the “Consolidated Stockholder Class and Derivative Action”). The plaintiffs allege that the Company’s former directors and certain former officers made materially false and misleading statements in press releases and SEC filings regarding the Company’s business, prospects and financial results and that the Company violated its by-laws and Delaware law by failing to hold its 2016 Annual Stockholders Meeting and claim breach of fiduciary duty, unjust enrichment and corporate waste.
After several years of motion practice and related court orders in the related Consolidated Securities Action, on July 24, 2020, the plaintiffs made a stockholder litigation demand on the Board containing overlapping factual allegations to those set forth in the Consolidated Stockholder Class and Derivative Action. On November 3, 2020, Plaintiffs were informed that the Board had finished investigating and resolved, among other things, that the demand should be rejected. In light of developments in the Consolidated Securities Action referenced above that remanded that case for further proceedings, the parties submitted a joint status report on December 29, 2021 requesting that the District Court continue the temporary stay pending the District Court’s reconsideration of the Defendants’ motion to dismiss the Second Amended Complaint in the Consolidated Securities Action. Following the Second Circuit’s reversal and remand on September 29, 2025, the Parties filed a status update on November 14, 2025 and an initial proposed scheduling order on February 6, 2026.
Baby Food Class Action Litigation
Since February 2021, the Company has been named in numerous consumer class actions alleging that the Company’s Earth’s Best® baby food products (the “Products”) contain unsafe and undisclosed levels of various naturally occurring heavy metals, namely lead, arsenic, cadmium and mercury. Those actions were transferred and consolidated as a single lawsuit in the U.S. District Court for the Eastern District of New York captioned In re Hain Celestial Heavy Metals Baby Food Litigation, Case No. 2:21-cv-678 (the “Consolidated Proceeding”). In the Consolidated Proceeding, the plaintiffs generally allege that the Company violated various state consumer protection laws and assert other state and common law warranty and unjust enrichment claims related to the alleged failure to disclose the presence of these metals, arguing that consumers would have either not purchased the Products or would have paid less for them had the Company made adequate disclosures. The Company filed a motion to dismiss the Consolidated Class Action Complaint. Following oral argument on August 1, 2024, the Court issued an order on December 27, 2024 in which it granted the Company’s motion to dismiss with respect to Plaintiffs’ claims arising out of the alleged presence of lead, cadmium, mercury, or other substances, as well as any claims challenging the use of the “USDA Organic” seal on the
29
Table of Contents
Products’ labeling, and denied the Company’s motion to dismiss with respect to Plaintiffs’ claims arising out of the alleged presence of arsenic in the Products. The Company filed its answer to the Consolidated Class Action Complaint on January 23, 2025. One consumer class action is pending in New York Supreme Court, Nassau County, which the court has stayed in deference to the Consolidated Proceeding. The Company denies the allegations in these lawsuits and contends that its baby foods are safe and properly labeled.
The claims raised in these lawsuits were brought in the wake of a highly publicized report issued by the U.S. House of Representatives Subcommittee on Economic and Consumer Policy on Oversight and Reform, dated February 4, 2021 (the “House Report”), addressing the presence of heavy metals in baby foods made by certain manufacturers, including the Company. Since the publication of the House Report, the Company has also received information requests with respect to the advertising and quality of its baby foods from certain governmental authorities, as such authorities investigate the claims made in the House Report. The Company is fully cooperating with these requests and has provided documents and other requested information.
The Company has been named in one civil government enforcement action, State of New Mexico ex rel. Balderas v. Nurture, Inc., et al., which was filed by the New Mexico Attorney General against the Company and several other manufacturers based on the alleged presence of heavy metals in their baby food products. The Company and several other manufacturers moved to dismiss the New Mexico Attorney General’s lawsuit, and the Court denied that motion. The Company filed its answer to the New Mexico Attorney General’s amended complaint on April 23, 2022, and discovery is ongoing. The Company denies the New Mexico Attorney General’s allegations and maintains that its baby foods are safe, properly labeled, and compliant with New Mexico law.
In addition to the consumer class actions discussed above, the Company is currently named in numerous lawsuits in state and federal courts alleging some form of personal injury from the ingestion of the Company’s Products, purportedly due to unsafe and undisclosed levels of various naturally occurring heavy metals. These lawsuits generally allege injuries related to neurological development disorders such as autism and attention deficit hyperactivity disorder.
Baby Food Multidistrict Litigation
On January 4, 2024, plaintiffs in federal cases across the country filed a Motion to Transfer Actions for Coordinated or Consolidated Pretrial Proceedings. On April 11, 2024, the United States Judicial Panel on Multidistrict Litigation granted plaintiffs’ motion and transferred the cases to the Northern District of California for coordinated or consolidated pretrial proceedings. On April 15, 2024, the court issued an order staying all outstanding discovery proceedings and pending motions and vacating all previously scheduled hearing dates. There are approximately
Baby Food California State Court Cases
There are currently
In Landon R. v. The Hain Celestial Group, Inc., et al., No. 23STCV24844, discovery has closed. The Court held hearings on the parties’ Sargon and Summary Judgment Motions. On December 3, 2025, the Court granted defendants’ Motion to Exclude Plaintiff’s Exposure Expert and Defendants’ Motion for Summary Judgment. The Court entered judgment in defendants’ favor on January 2, 2026.
On September 30, 2025, the Court lifted the discovery and pleading stay in two additional cases: Kaleb R. v. Hain Celestial Group, Inc. et al. (No. 23STCV30542) and Samuel R. v. Hain Celestial Group, Inc. et al. (No. 23CV057126). Discovery is ongoing in both cases.
30
Table of Contents
Palmquist v. The Hain Celestial Group
During a jury trial in February 2023 in the baby food-related matter Palmquist v. The Hain Celestial Group, Inc., the court granted the Company’s motion for a directed verdict, finding no liability for the Company. The Court entered Final Judgment in the Company’s favor on March 3, 2023.
Plaintiffs appealed in the Fifth Circuit, and on May 28, 2024, the Fifth Circuit reversed the district court’s order denying Plaintiff’s motion to remand the case and vacated the final judgement of the district court. The Company filed a Petition for En Banc Reconsideration, which the Fifth Circuit denied.
The Company successfully petitioned the United States Supreme Court for a writ of certiorari, and the appeal is fully briefed as of September 10, 2025. The Court heard oral argument on November 4, 2025 and the parties await a decision.
The case has been remanded to Texas state court, where it is now pending in the District Court of Brazoria County, Texas. Discovery is ongoing, but the trial has been continued pending a decision at the United States Supreme Court.
With respect to all of the above-described baby food matters, the Company denies that its Products led to any of the alleged injuries and will defend these cases vigorously. That said, as is common in circumstances of this nature, additional lawsuits may be filed against the Company in the future, asserting similar or different legal theories and seeking similar or different types of damages and relief. Such lawsuits may be resolved in a manner adverse to us, and we may incur substantial costs or damages not covered by insurance, which could have a material adverse effect on our financial condition and business.
Other
In addition to the matters described above, the Company is and may be a defendant in lawsuits from time to time in the normal course of business.
With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated. As of the end of the period covered by this report, the Company has not recorded a liability for any of the matters disclosed in this note. It is possible that some matters could require the Company to pay damages, incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report.
31
Table of Contents
The Company’s organizational structure consists of
Segment Adjusted EBITDA excludes: net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses (gains), proceeds from insurance claim, certain litigation and related costs, plant closure related costs, net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, net, costs associated with acquisitions, divestitures and other transactions, (gain) loss on sale of assets, impairment of goodwill, intangibles and long-lived asset impairments and other adjustments. In addition, Segment Adjusted EBITDA does not include Corporate and Other expenses related to the Company’s centralized administrative functions, which do not specifically relate to a reportable segment. Such Corporate and Other expenses are comprised mainly of compensation and related expenses of certain of the Company’s senior executive officers and other employees who perform duties related to the entire enterprise, litigation expense and expenses for certain professional fees, facilities, and other items which benefit the Company as a whole.
32
Table of Contents
The following tables set forth financial information about each of the Company’s reportable segment’s revenue, significant segment expenses and measure of segment profit or loss for the three and six months ended December 31, 2025 and 2024. Information about total assets by segment is not disclosed because such information is not reported to or used by the Company’s CODM for purposes of assessing segment performance or allocating resources. Transactions between reportable segments were insignificant for all periods presented.
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales, adjusted to exclude restructuring activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
International |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Marketing expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
International |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other selling, general and administrative expenses, adjusted to exclude restructuring activities and depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
International |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization and other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Reportable Segments Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Equity in net loss of equity-method investees |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Provision for income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized currency (losses) gains |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Proceeds from insurance claim(a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certain litigation expenses, net(b) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Restructuring activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Productivity and transformation costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Plant closure related costs, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisitions, divestitures and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction and integration costs, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Gain (loss) on sale of assets |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Impairment charges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Intangibles and long-lived asset impairment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
33
Table of Contents
The Company’s net sales by product category are as follows:
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Snacks |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Baby & Kids |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beverages |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Meal Preparation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personal Care |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s net sales by geographic region, which are generally based on the location of the Company’s subsidiaries, are as follows:
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Western Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company’s long-lived assets, which represent net property, plant and equipment and operating lease right-of-use assets by geographic area, were as follows:
|
|
December 31, 2025 |
|
|
June 30, 2025 |
|
||
United States |
|
$ |
|
|
$ |
|
||
United Kingdom |
|
|
|
|
|
|
||
Western Europe |
|
|
|
|
|
|
||
Canada |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
On January 30, 2026, the Company entered into an asset purchase agreement with Snackruptors Inc. (“Snackruptors”), pursuant to which, subject to the terms and conditions set forth therein, Snackruptors has agreed to acquire from the Company its North American Snacks Business for $
34
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and the related Notes thereto for the period ended December 31, 2025 contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Forward-looking statements in this Form 10-Q are qualified by the cautionary statement included in this Form 10-Q under the heading “Forward-Looking Statements” in the introduction of this Form 10-Q.
Overview
The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”) 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 and meal preparation are marketed and sold in over 70 countries around the world. The Company operates under two reportable segments: North America and International.
The Company’s leading brands include Garden Veggie Snacks™, Terra® chips, Garden of Eatin’® snacks, Hartley’s® jelly, Earth’s Best® Organic and Ella’s Kitchen® baby and kid’s foods, Celestial Seasonings® teas, Joya® and Natumi® plant-based beverages, The Greek Gods® yogurt, Cully & Sully®, Yorkshire Provender®, New Covent Garden® and Imagine® soups, among others.
Strategic Review
We are focused on five actions to win in the marketplace and drive growth: aggressively streamlining our portfolio, accelerating brand renovation and innovation, implementing price increases along with broader revenue growth management, driving productivity and working capital efficiency, and enhancing our digital capabilities, inclusive of ecommerce.
During the fourth quarter of fiscal year 2025, we announced that our Board of Directors was conducting a comprehensive review of the Company’s portfolio with the assistance of our independent financial advisor.
As part of this review, on January 30, 2026, the Company entered into a definitive agreement to sell its North American Snacks business, including Garden Veggie Snacks™, Terra® chips and Garden of Eatin’® snacks as well as certain private label products (the “North American Snacks Business”) for $115,000 in cash, subject to a customary inventory adjustment (the “Transaction”). The Company will use the net proceeds from the Transaction to pay down debt. The Transaction, which is expected to close in February 2026, represents an important first step in the Company’s broader strategic review, as it will reduce leverage while enabling the Company to focus on a more concentrated portfolio of core assets to drive growth. See Note 19, Subsequent Event. Further, in the third quarter of fiscal year 2025, we announced that we were exploring strategic alternatives regarding our personal care business to focus on our portfolio of better-for-you food and beverages.
35
Table of Contents
Restructuring Program
During the first quarter of fiscal year 2024, the Company began a multi‑year restructuring program (the “Restructuring Program”), to improve profitability and support future growth and incurred charges related to contract terminations, asset write‑downs, employee‑related costs, and other transformation-related expenses.
Cumulative pretax charges associated with the Restructuring Program are expected to be $115 million - $125 million which represents an increase of $15 million from the previously reported range, primarily due to incremental restructuring actions expected to be incurred in connection with the sale of the North American Snacks Business. The Restructuring Program is expected to conclude by fiscal year 2027. For the three and six months ended December 31, 2025, we incurred pretax charges of $3.8 million and $17.3 million respectively, associated with the Restructuring Program, compared to approximately $7.3 million and $12.7 million respectively, in the corresponding periods of the prior year.
Annualized pretax savings are expected to be $130 million - $150 million. The gross savings to date reflect operating model savings, productivity delivery and benefits from revenue growth management initiatives, offset by volume deleveraging and input cost inflation.
Global Economic Environment
Inflation volatility, shifting consumer behavior, and broader geopolitical tensions have contributed to rising supply chain costs and broader business impacts. Ongoing economic uncertainty, driven by factors such as inflation volatility, evolving fiscal policies, global supply chain constraints, changes in interest rates, and changing U.S. and international trade restrictions and tariffs further heightens industry-wide uncertainty. We continually assess the nature and extent of these potential and evolving impacts on our business, consolidated operational results, liquidity, and capital resources.
36
Table of Contents
Comparison of Three Months Ended December 31, 2025 to Three Months Ended December 31, 2024
Consolidated Results
The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the three months ended December 31, 2025 and 2024 (dollars in thousands, other than per share amounts and percentages, which may not add due to rounding):
|
|
Three Months Ended |
|
|
Change in |
|
||||||||||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Dollars |
|
|
Percentage |
|
||||||||||||
Net sales |
|
$ |
384,120 |
|
|
|
100.0 |
% |
|
$ |
411,485 |
|
|
|
100.0 |
% |
|
$ |
(27,365 |
) |
|
|
(6.7 |
)% |
Cost of sales |
|
|
309,681 |
|
|
|
80.6 |
% |
|
|
318,033 |
|
|
|
77.3 |
% |
|
|
(8,352 |
) |
|
|
(2.6 |
)% |
Gross profit |
|
|
74,439 |
|
|
|
19.4 |
% |
|
|
93,452 |
|
|
|
22.7 |
% |
|
|
(19,013 |
) |
|
|
(20.3 |
)% |
Selling, general and administrative expenses |
|
|
60,903 |
|
|
|
15.9 |
% |
|
|
70,155 |
|
|
|
17.0 |
% |
|
|
(9,252 |
) |
|
|
(13.2 |
)% |
Goodwill impairment |
|
|
119,908 |
|
|
|
31.2 |
% |
|
|
91,267 |
|
|
|
22.2 |
% |
|
|
28,641 |
|
|
|
(100.0 |
)% |
Intangibles and long-lived asset impairment |
|
|
11,917 |
|
|
|
3.1 |
% |
|
|
17,986 |
|
|
|
4.4 |
% |
|
|
(6,069 |
) |
|
|
(33.7 |
)% |
Productivity and transformation costs |
|
|
5,234 |
|
|
|
1.4 |
% |
|
|
4,190 |
|
|
|
1.0 |
% |
|
|
1,044 |
|
|
|
24.9 |
% |
Amortization of acquired intangible assets |
|
|
1,199 |
|
|
|
0.3 |
% |
|
|
1,753 |
|
|
|
0.4 |
% |
|
|
(554 |
) |
|
|
(31.6 |
)% |
Proceeds from insurance claim |
|
|
(25,900 |
) |
|
|
(6.7 |
)% |
|
|
— |
|
|
|
— |
|
|
|
(25,900 |
) |
|
|
100.0 |
% |
Operating loss |
|
|
(98,822 |
) |
|
|
(25.7 |
)% |
|
|
(91,899 |
) |
|
|
(22.3 |
)% |
|
|
(6,923 |
) |
|
|
7.5 |
% |
Interest and other financing expense, net |
|
|
15,662 |
|
|
|
4.1 |
% |
|
|
12,800 |
|
|
|
3.1 |
% |
|
|
2,862 |
|
|
|
22.4 |
% |
Other income, net |
|
|
(997 |
) |
|
|
(0.3 |
)% |
|
|
(4,040 |
) |
|
|
(1.0 |
)% |
|
|
3,043 |
|
|
|
-75.3 |
% |
Loss before income taxes and equity in net loss of equity-method investees |
|
|
(113,487 |
) |
|
|
(29.5 |
)% |
|
|
(100,659 |
) |
|
|
(24.5 |
)% |
|
|
(12,828 |
) |
|
|
12.7 |
% |
Provision for income taxes |
|
|
2,386 |
|
|
|
0.6 |
% |
|
|
2,728 |
|
|
|
0.7 |
% |
|
|
(342 |
) |
|
|
-12.5 |
% |
Equity in net loss of equity-method investees |
|
|
133 |
|
|
|
0.0 |
% |
|
|
588 |
|
|
|
0.1 |
% |
|
|
(455 |
) |
|
|
(77.4 |
)% |
Net loss |
|
$ |
(116,006 |
) |
|
|
(30.2 |
)% |
|
$ |
(103,975 |
) |
|
|
(25.3 |
)% |
|
$ |
(12,031 |
) |
|
|
11.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA |
|
$ |
24,282 |
|
|
|
6.3 |
% |
|
$ |
37,893 |
|
|
|
9.2 |
% |
|
$ |
(13,611 |
) |
|
|
(35.9 |
)% |
Diluted net loss per common share |
|
$ |
(1.28 |
) |
|
|
|
|
$ |
(1.15 |
) |
|
|
|
|
$ |
(0.13 |
) |
|
|
10.9 |
% |
||
* Percentage is not meaningful due to one or more numbers being negative.
Net Sales
Net sales for the three months ended December 31, 2025 were $384.1 million, a decrease of $27.4 million, or 6.7%, including an unfavorable impact of $10.2 million, or 2.2%, related to held for sale businesses, discontinued brands and exited product categories and a favorable impact of $9.0 million, or 2.2%, from foreign exchange, as compared to the prior year quarter. The decrease in net sales reflected a decline in the North America reportable segment, partially offset by an increase in net sales in the International reportable segment. Organic net sales, defined as net sales adjusted to exclude the impact of foreign exchange, acquisitions, divestitures, discontinued brands and exited product categories, decreased $26.2 million, or 6.7%, from the prior year quarter. The decrease in organic net sales was due to decline in both the North America and International reportable segments. Additionally, the decrease in organic net sales was comprised of a 9.0% decrease in volume/mix, partially offset by a 2.0% increase in price. Further details of changes in net sales by segment are provided below in the Segment Results section.
Gross Profit
Gross profit for the three months ended December 31, 2025 was $74.4 million, a decrease of $19.0 million, or 20.3%, as compared to the prior year quarter. Gross profit margin for the three months ended December 31, 2025 was 19.4% compared with 22.7% in the prior year quarter.
The decrease in gross profit was driven by both the North America and International reportable segments. The decrease in the North America reportable segment was mainly due to lower sales volume, cost inflation and unfavorable fixed cost absorption, partially offset by productivity savings and pricing. International reportable segment gross profit decrease was driven by cost inflation, lower volume/mix and unfavorable fixed cost absorption, partially offset by productivity savings and pricing.
37
Table of Contents
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $60.9 million for the three months ended December 31, 2025, a decrease of $9.3 million, or 13.2%, from $70.2 million for the prior year quarter. The decrease was primarily due to lower compensation-related expenses and non-employee-related cost discipline, as the Company continued to implement overhead reduction actions.
Goodwill Impairment
During the three months ended December 31, 2025, the Company recognized aggregate non-cash goodwill impairment charges of $119.9 million related to its U.S. and U.K. reporting units. During the three months ended December 31, 2024, the Company recorded a non-cash goodwill impairment charge of $91.3 million within the North America segment related to its U.S. reporting unit. See Note 9, Goodwill and Intangible Assets, and Note 14, Fair Value Measurements, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Intangibles and Long-Lived Asset Impairment
During the three months ended December 31, 2025, the Company recorded a non-cash impairment charge of $11.9 million within its International segment related to the Hartley’s® jelly indefinite-lived intangible asset. During the three months ended December 31, 2024, the Company recorded a non-cash impairment charge of $15.7 million within its North America segment related to the indefinite and definite lived intangible assets associated with its personal care brands (namely, Avalon Organics®, JASON®, and Live Clean®) and $2.3 million related to an asset group primarily comprised of certain production assets in the North America reportable segment. See Note 9, Goodwill and Intangible Assets, and Note 14, Fair Value Measurements, in the Notes of the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q
Productivity and Transformation Costs
Productivity and transformation costs were $5.2 million for the three months ended December 31, 2025, an increase of $1.0 million, or 24.9%, from $4.2 million in the prior year quarter. The increase was primarily due to higher costs incurred in connection with the Restructuring Program.
Amortization of Acquired Intangible Assets
Amortization of acquired intangibles was $1.2 million for the three months ended December 31, 2025, a decrease of $0.6 million from $1.8 million in the prior year quarter.
Proceeds from Insurance Claim
Proceeds from insurance claim was $25.9 million for the three months ended December 31, 2025 on account of the recognition of a Representation & Warranty (“R&W”) insurance receivable related to a prior acquisition.
Operating Loss
Operating loss for the three months ended December 31, 2025 was $98.8 million compared to $91.9 million in the prior year quarter as a result of the items described above.
Interest and Other Financing Expense, Net
Interest and other financing expense, net totaled $15.7 million for the three months ended December 31, 2025, an increase of $2.9 million, or 22.4%, from $12.8 million in the prior year quarter. The increase resulted primarily from a higher interest rate spread as well as increased amortization of deferred financing fees related to the May 2025 and September 2025 amendments to our Credit Agreement, as defined below. See Note 10, Debt and Borrowings, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
38
Table of Contents
Other Income, Net
Other income, net totaled $1.0 million for the three months ended December 31, 2025, a decrease of $3.0 million, or 75.3%, from $4.0 million in the prior year quarter. The decrease was primarily due to a reduction in net foreign exchange gains in the prior year period.
Other income, net for the three months ended December 31, 2025 was primarily comprised of a $1.1 million aggregate pretax gain on the sale of intangible assets and certain property and equipment of the Yves Veggie Cuisine® plant-based business in Canada.
Other income, net for the three months ended December 31, 2024 comprised net foreign exchange gains of $2.4 million and the recognition of a $1.6 million pretax gain on the sale of assets related to the Company’s former Bell, CA production facility.
Loss Before Income Taxes and Equity in Net Loss of Equity-Method Investees
Loss before income taxes and equity in net loss of our equity-method investees for the three months ended December 31, 2025 was $113.5 million compared to $100.7 million in the prior year quarter. The increase in the loss before income taxes and equity in net loss of our equity-method investees was due to the items discussed above.
Provision for Income Taxes
The provision for income taxes includes federal, foreign, state and local income taxes. Our income tax expense was $2.4 million for the three months ended December 31, 2025 compared to $2.7 million in the prior year quarter.
The effective income tax rate was an expense of 2.1% and 2.7% for the three months ended December 31, 2025 and 2024, respectively. The income tax expense for the three months ended December 31, 2025 reflected foreign tax expense in certain jurisdictions, recognition of the R&W insurance receivable related to a prior acquisition, impairment of goodwill, and movement in the valuation allowance for both federal and state income taxes. The effective income tax rate for the three months ended December 31, 2024 was impacted by tax expense in certain jurisdictions, impairment of goodwill and personal care intangibles and movement in the valuation allowances for both federal and state income taxes.
Equity in Net Loss of Equity-Method Investees
Equity in net loss from our equity-method investments for the three months ended December 31, 2025 was a loss of $0.1 million compared to $0.6 million in the prior year quarter.
Net Loss
Net loss for the three months ended December 31, 2025 was $116.0 million, or $1.28 per diluted share, compared to $104.0 million, or $1.15 per diluted share, in the prior year quarter. The increase in net loss was attributable to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA was $24.3 million and $37.9 million for the three months ended December 31, 2025 and 2024, respectively, as a result of the factors discussed above. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net loss to Adjusted EBITDA.
39
Table of Contents
Segment Results
The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the three months ended December 31, 2025 and 2024:
(Dollars in thousands) |
|
North |
|
|
International |
|
|
Corporate |
|
|
Consolidated |
|
||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three months ended 12/31/25 |
|
$ |
197,821 |
|
|
$ |
186,299 |
|
|
$ |
— |
|
|
$ |
384,120 |
|
Three months ended 12/31/24 |
|
|
229,289 |
|
|
|
182,196 |
|
|
|
— |
|
|
|
411,485 |
|
$ change |
|
$ |
(31,468 |
) |
|
$ |
4,103 |
|
|
n/a |
|
|
$ |
(27,365 |
) |
|
% change |
|
|
(13.7 |
)% |
|
|
2.3 |
% |
|
n/a |
|
|
|
(6.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three months ended 12/31/25 |
|
$ |
10,911 |
|
|
$ |
18,998 |
|
|
$ |
(5,627 |
) |
|
$ |
24,282 |
|
Three months ended 12/31/24 |
|
|
25,307 |
|
|
|
22,526 |
|
|
|
(9,940 |
) |
|
|
37,893 |
|
$ change |
|
$ |
(14,396 |
) |
|
$ |
(3,528 |
) |
|
$ |
4,313 |
|
|
$ |
(13,611 |
) |
% change |
|
|
(56.9 |
)% |
|
|
(15.7 |
)% |
|
|
43.4 |
% |
|
|
(35.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three months ended 12/31/25 |
|
|
5.5 |
% |
|
|
10.2 |
% |
|
|
|
|
|
6.3 |
% |
|
Three months ended 12/31/24 |
|
|
11.0 |
% |
|
|
12.4 |
% |
|
|
|
|
|
9.2 |
% |
|
See the Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations and Note 18, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a reconciliation of segment Adjusted EBITDA.
North America
Our net sales in the North America reportable segment for the three months ended December 31, 2025 were $197.8 million, a decrease of $31.5 million, or 13.7%, including an unfavorable impact of $10.2 million, or 3.4%, related to held for sale businesses, discontinued brands and exited product categories, as compared to the prior year quarter. Organic net sales decreased $21.3 million, or 10.3%, to $185.0 million from $206.4 million in the prior year quarter.
The decrease in net sales was primarily due to lower sales in the snacks, meal preparation, and baby & kids categories, partially offset by growth in the beverages category. The decrease in the snacks category was driven by distribution losses and velocity declines. The decline in the meal preparation category was primarily due to lower volume.
The decrease in organic net sales was primarily due to lower sales in the snacks and baby & kids categories, partially offset by growth in the beverages category. The decrease in the baby & kids category was driven by lapping supply recovery from last year. The increase in the beverage category is primarily due to lower trade spend and promotion effectiveness.
Adjusted EBITDA for the three months ended December 31, 2025 was $10.9 million, a decrease of $14.4 million, or 56.9%, from Adjusted EBITDA of $25.3 million in the prior year quarter. The decrease was primarily driven by lower gross margins, partially offset by a reduction in SG&A. The decrease in gross margin was driven by lower volume/mix, cost inflation and unfavorable fixed cost absorption, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 5.5%, a 550-basis point decrease from the prior year period.
40
Table of Contents
International
Our net sales in the International reportable segment for the three months ended December 31, 2025 were $186.3 million, an increase of $4.1 million, or 2.3%, including a favorable impact of $8.9 million, or 4.9%, related to foreign exchange, as compared to the prior year quarter. Organic net sales decreased $4.8 million, or 2.7%, to $176.6 million from $181.4 million the prior year quarter.
The increase in net sales was primarily due to higher sales in the meal preparation and beverages categories, partially offset by decline in baby & kids category. The decrease in organic net sales was primarily due to lower sales in the baby & kids category which was primarily driven by industry-wide volume softness in purees in the U.K.
Adjusted EBITDA for the three months ended December 31, 2025 was $19.0 million, a decrease of $3.5 million, or 15.7%, from Adjusted EBITDA of $22.5 million in the prior year quarter. The decrease was primarily driven by a decrease in gross profit associated with cost inflation, unfavorable fixed cost absorption and lower volume/mix, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 10.2%, a 220-basis point decrease from the prior year period.
Corporate and Other
The decrease in Corporate and Other adjusted EBITDA primarily reflected a reduction in compensation-related expenses.
Refer to Note 18, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Comparison of Six Months Ended December 31, 2025 to Six Months Ended December 31, 2024
Consolidated Results
The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the six months ended December 31, 2025 and 2024 (amounts in thousands, other than per share data and percentages, which may not add due to rounding):
|
|
Six Months Ended |
|
|
Change in |
|
||||||||||||||||||
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
|
Dollars |
|
|
Percentage |
|
||||||||||||
Net sales |
|
$ |
752,003 |
|
|
|
100.0 |
% |
|
$ |
806,081 |
|
|
|
100.0 |
% |
|
$ |
(54,078 |
) |
|
|
(6.7 |
)% |
Cost of sales |
|
|
609,486 |
|
|
|
81.0 |
% |
|
|
631,019 |
|
|
|
78.3 |
% |
|
|
(21,533 |
) |
|
|
(3.4 |
)% |
Gross profit |
|
|
142,517 |
|
|
|
19.0 |
% |
|
|
175,062 |
|
|
|
21.7 |
% |
|
|
(32,545 |
) |
|
|
(18.6 |
)% |
Selling, general and administrative expenses |
|
|
126,415 |
|
|
|
16.8 |
% |
|
|
141,483 |
|
|
|
17.6 |
% |
|
|
(15,068 |
) |
|
|
(10.7 |
)% |
Goodwill impairment |
|
|
119,908 |
|
|
|
15.9 |
% |
|
|
91,267 |
|
|
|
11.3 |
% |
|
|
28,641 |
|
|
|
31.4 |
% |
Intangibles and long-lived asset impairment |
|
|
11,917 |
|
|
|
1.6 |
% |
|
|
18,017 |
|
|
|
2.2 |
% |
|
|
(6,100 |
) |
|
|
(33.9 |
)% |
Productivity and transformation costs |
|
|
13,453 |
|
|
|
1.8 |
% |
|
|
9,208 |
|
|
|
1.1 |
% |
|
|
4,245 |
|
|
|
46.1 |
% |
Amortization of acquired intangible assets |
|
|
2,411 |
|
|
|
0.3 |
% |
|
|
3,933 |
|
|
|
0.5 |
% |
|
|
(1,522 |
) |
|
|
(38.7 |
)% |
Proceeds from insurance claim |
|
|
(25,900 |
) |
|
|
(3.4 |
)% |
|
|
— |
|
|
|
— |
|
|
|
(25,900 |
) |
|
|
100.0 |
% |
Operating loss |
|
|
(105,687 |
) |
|
|
(14.1 |
)% |
|
|
(88,846 |
) |
|
|
(11.0 |
)% |
|
|
(16,841 |
) |
|
|
19.0 |
% |
Interest and other financing expense, net |
|
|
31,161 |
|
|
|
4.1 |
% |
|
|
26,546 |
|
|
|
3.3 |
% |
|
|
4,615 |
|
|
|
17.4 |
% |
Other (income) expense, net |
|
|
(1,653 |
) |
|
|
(0.2 |
)% |
|
|
1,252 |
|
|
|
0.2 |
% |
|
|
(2,905 |
) |
|
* |
|
|
Loss before income taxes and equity in net loss of equity-method investees |
|
|
(135,195 |
) |
|
|
(18.0 |
)% |
|
|
(116,644 |
) |
|
|
(14.5 |
)% |
|
|
(18,551 |
) |
|
|
15.9 |
% |
Provision for income taxes |
|
|
1,130 |
|
|
|
0.2 |
% |
|
|
6,251 |
|
|
|
0.8 |
% |
|
|
(5,121 |
) |
|
|
(81.9 |
)% |
Equity in net loss of equity-method investees |
|
|
306 |
|
|
|
0.0 |
% |
|
|
743 |
|
|
|
0.1 |
% |
|
|
(437 |
) |
|
|
(58.8 |
)% |
Net loss |
|
$ |
(136,631 |
) |
|
|
(18.2 |
)% |
|
$ |
(123,638 |
) |
|
|
(15.3 |
)% |
|
$ |
(12,993 |
) |
|
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA |
|
$ |
44,014 |
|
|
|
5.9 |
% |
|
$ |
60,268 |
|
|
|
7.5 |
% |
|
$ |
(16,254 |
) |
|
|
(27.0 |
)% |
Diluted net loss per common share |
|
$ |
(1.51 |
) |
|
|
|
|
$ |
(1.37 |
) |
|
|
|
|
$ |
(0.14 |
) |
|
|
9.9 |
% |
||
41
Table of Contents
* Percentage is not meaningful due to one or more numbers being negative.
Net Sales
Net sales for the six months ended December 31, 2025 were $752.0 million, a decrease of $54.1 million, or 6.7%, including an unfavorable impact of $23.2 million, or 2.4%, related to held for sale businesses, discontinued brands and exited product categories and a favorable impact of $15.6 million, or 1.9%, from foreign exchange, as compared to the prior year period. The decrease in net sales was due to a decline in the North America reportable segment, partially offset by an increase in the International reportable segment. Organic net sales decreased $46.5 million, or 6.2%, from the prior year period. The decrease in organic net sales was due to decline in both the North America and International reportable segments. Additionally, the decrease in organic net sales was comprised of a 7.9% decrease in volume/mix, partially offset by a 1.7% increase in price. Further details of changes in net sales by segment are provided below in the Segment Results section.
Gross Profit
Gross profit for the six months ended December 31, 2025 was $142.5 million, a decrease of $32.5 million, or 18.6%, as compared to the prior year period. Gross profit margin for the six months ended December 31, 2025 was 19.0% compared with 21.7% in the prior year period.
The decrease in gross profit was driven by both the North America and International reportable segments. The decline in the North America reportable segment was due to lower sales volume, partially offset by favorable pricing and trade efficiencies. The International reportable segment had a decrease in gross profit mainly due to cost inflation, partially offset by pricing.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $126.4 million for the six months ended December 31, 2025, a decrease of $15.1 million, or 10.7%, from $141.5 million for the prior year period. The decrease was primarily due to lower compensation-related expenses and non-employee-related cost discipline, as the Company continued implementing overhead reduction actions.
Goodwill Impairment
During the six months ended December 31, 2025, the Company recognized aggregate non-cash goodwill impairment charges of $119.9 million related to its U.S. and U.K. reporting units. During the six months ended December 31, 2024, the Company recorded a non-cash goodwill impairment charge of $91.3 million within the North America segment related to its U.S. reporting unit. See Note 9, Goodwill and Intangible Assets, and Note 14, Fair Value Measurements, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Intangibles and Long-Lived Asset Impairment
During the six months ended December 31, 2025, the Company recorded a non-cash impairment charge of $11.9 million within its International segment related to the Hartley’s® jelly indefinite-lived intangible asset. During the six months ended December 31, 2024, the Company recorded a non-cash impairment charge of $15.7 million within its North America segment related to the indefinite and definite lived intangible assets associated with its personal care brands (namely, Avalon Organics®, JASON®, and Live Clean®) and $2.3 million related to an asset group primarily comprised of certain production assets in the North America reportable segment. See Note 9, Goodwill and Intangible Assets, and Note 14, Fair Value Measurements, in the Notes of the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q
Productivity and Transformation Costs
Productivity and transformation costs were $13.5 million for the six months ended December 31, 2025, a decrease of $4.2 million, or 46.1%, from $9.2 million in the prior year period. The decrease primarily reflected a reduction in restructuring costs incurred in connection with the Restructuring Program.
42
Table of Contents
Amortization of Acquired Intangible Assets
Amortization of acquired intangibles was $2.4 million for the six months ended December 31, 2025, a decrease of $1.5 million, or 38.7%, from $3.9 million in the prior year period.
Proceeds from Insurance Claim
Proceeds from insurance claim was $25.9 million for the six months ended December 31, 2025 on account of a R&W insurance receivable related to a prior acquisition.
Operating Loss
Operating loss for the six months ended December 31, 2025 was $105.7 million compared to $88.8 million in the prior year period as a result of the items described above.
Interest and Other Financing Expense, Net
Interest and other financing expense, net totaled $31.2 million for the six months ended December 31, 2025, an increase of $4.6 million, or 17.4%, from $26.5 million in the prior year period. The increase was primarily driven by a higher interest rate spread as well as increased amortization of deferred financing fees related to the amendment of our credit agreement. See Note 10, Debt and Borrowings, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Other (Income) Expense, Net
Other income, net totaled $1.7 million for the six months ended December 31, 2025, compared to other expense, net of $1.3 million in the prior year period.
Other income, net for the six months ended December 31, 2025 was primarily comprised of a $1.1 million aggregate pretax gain on the sale of the intangible assets and certain property and equipment of the Yves Veggie Cuisine® plant-based business in Canada.
Other expense, net for the six months ended December 31, 2024 was primarily comprised of pretax loss of $3.9 million on the sale of ParmCrisps®, partially offset by a $1.6 million pretax gain on the sale of assets related to the Company’s former Bell, CA production facility and $0.8 million of foreign exchange gains.
Loss Before Income Taxes and Equity in Net Loss of Equity-Method Investees
Loss before income taxes and equity in net loss of our equity-method investees was $135.2 million for the six months ended December 31, 2025, compared to a $116.6 million loss in the prior year period. The increase in the loss before income taxes and equity in net loss of our equity-method investees was due to the items discussed above.
Provision for Income Taxes
The provision for income taxes includes federal, foreign, state and local income taxes. Our income tax expense was $1.1 million for the six months ended December 31, 2025 compared to income tax expense of $6.3 million in the prior year comparable period.
The effective income tax rate was an expense of 0.8% and 5.4% for the six months ended December 31, 2025 and 2024, respectively. The income tax expense for the six months ended December 31, 2025 reflected foreign tax expense in certain jurisdictions, recognition of the R&W insurance receivable related to a prior acquisition, impairment of goodwill, and movement in the valuation allowance for both federal and state income taxes. The effective income tax rate for the six months ended December 31, 2024 was impacted by tax expense in certain jurisdictions, the impairment of goodwill and personal care intangibles and movement in the valuation allowances for both federal and state income taxes.
43
Table of Contents
Equity in Net Loss of Equity-Method Investees
Equity in net loss from our equity-method investments for the six months ended December 31, 2025 was a loss of $0.3 million compared to a loss of $0.7 million in the prior year period.
Net Loss
Net loss for the six months ended December 31, 2025 was $136.6 million, or $1.51 per diluted share, compared to $123.6 million, or $1.37 per diluted share, in the prior year period. The increase in net loss was attributable to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA was $44.0 million and $60.3 million for the six months ended December 31, 2025 and 2024, respectively, as a result of the factors discussed above. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net loss to Adjusted EBITDA.
Segment Results
The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the six months ended December 31, 2025 and 2024:
(Dollars in thousands) |
|
North |
|
|
International |
|
|
Corporate |
|
|
Consolidated |
|
||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six months ended 12/31/25 |
|
$ |
401,741 |
|
|
$ |
350,262 |
|
|
$ |
— |
|
|
$ |
752,003 |
|
Six months ended 12/31/24 |
|
|
460,429 |
|
|
|
345,652 |
|
|
|
— |
|
|
|
806,081 |
|
$ change |
|
$ |
(58,688 |
) |
|
$ |
4,610 |
|
|
n/a |
|
|
$ |
(54,078 |
) |
|
% change |
|
|
(12.7 |
)% |
|
|
1.3 |
% |
|
n/a |
|
|
|
(6.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six months ended 12/31/25 |
|
$ |
27,920 |
|
|
$ |
31,553 |
|
|
$ |
(15,459 |
) |
|
$ |
44,014 |
|
Six months ended 12/31/24 |
|
|
37,766 |
|
|
|
42,896 |
|
|
|
(20,394 |
) |
|
|
60,268 |
|
$ change |
|
$ |
(9,846 |
) |
|
$ |
(11,343 |
) |
|
$ |
4,935 |
|
|
$ |
(16,254 |
) |
% change |
|
|
(26.1 |
)% |
|
|
(26.4 |
)% |
|
|
24.2 |
% |
|
|
(27.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six months ended 12/31/25 |
|
|
6.9 |
% |
|
|
9.0 |
% |
|
|
|
|
|
5.9 |
% |
|
Six months ended 12/31/24 |
|
|
8.2 |
% |
|
|
12.4 |
% |
|
|
|
|
|
7.5 |
% |
|
See the Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations and Note 18, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a reconciliation of segment Adjusted EBITDA.
North America
Our net sales in the North America reportable segment for the six months ended December 31, 2025 were $401.7 million, a decrease of $58.7 million, or 12.7%, including an unfavorable impact of $22.8 million, or 3.9%, related to held for sale businesses, discontinued brands and exited product categories, as compared to the prior year period. Organic net sales decreased $35.8 million, or 8.8%, to $370.0 million from $405.7 million in the prior year period.
The decrease in net sales was due to lower sales in all categories except for the beverages category, which had higher net sales compared to the prior year period. The decrease in organic net sales was primarily due to lower sales in the snacks and baby & kids categories, partially offset by growth in the beverages category. The decrease in the snacks category was driven by distribution losses and velocity declines, while the baby & kids category net sales decline was primarily driven by volume softness in formula.
44
Table of Contents
Adjusted EBITDA for the six months ended December 31, 2025 was $27.9 million, a decrease of $9.8 million, or 26.1%, from Adjusted EBITDA of $37.8 million in the prior year period. The decrease was primarily driven by lower gross margins, partially offset by a reduction in SG&A. The decrease in gross margin was driven by lower volume/mix, cost inflation and unfavorable fixed cost absorption, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 6.9%, a 130-basis point decrease from the prior year period.
International
Our net sales in the International reportable segment for the six months ended December 31, 2025 were $350.3 million, an increase of $4.6 million, or 1.3%, including a favorable impact of $15.7 million, or 4.5%, related to foreign exchange, as compared to the prior year period. Organic net sales decreased $10.7 million, or 3.1%, to $332.9 million from $343.6 million in the prior year period.
The increase in net sales was primarily due to higher sales in the meal preparation and beverages categories, partially offset by decline in the baby & kids category. The decrease in organic net sales was primarily due to lower sales in the baby & kids and snacks categories, partially offset by growth in the meal preparation category. The decrease in the baby & kids category was primarily driven by industry-wide volume softness in purees in the U.K, while the decline in the snacks category was due to lower volumes.
Adjusted EBITDA for the six months ended December 31, 2025 was $31.6 million, a decrease of $11.3 million, or 26.4%, from Adjusted EBITDA of $42.9 million in the prior year period. The decrease was primarily due to lower gross profit driven by cost inflation, unfavorable fixed cost absorption and lower volume/mix, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 9.0%, a 340-basis point decrease from the prior year period.
Corporate and Other
The decrease in Corporate and Other adjusted EBITDA primarily reflected a reduction in compensation-related expenses.
Refer to Note 18, Segment Information, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Liquidity and Capital Resources
We finance our operations and growth primarily with the cash flows we generate from our operations and from borrowings available to us under our Credit Agreement (as defined below). We believe that our cash flows from operations and borrowing capacity under our Credit Agreement will be adequate to meet anticipated operating and other expenditures. See Note 2, Basis of Presentation and Note 10, Debt and Borrowings, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
As of December 31, 2025, we had $705,800 of debt obligations maturing on December 22, 2026, consisting of $454,000 of loans outstanding under the Revolver and $251,800 of Term Loans (each as defined in Note 10, Debt and Borrowings). As of December 31, 2025, we had cash of $68,017 and available liquidity of $143,651, subject to compliance with financial covenants, and the Company was in compliance with all associated covenants under its Credit Agreement (see Note 10, Debt and Borrowings). On January 2, 2026, the Company received $25,900 of proceeds from an insurance claim (see Note 18, Segment Information), which it used to repay loans outstanding under the Revolver, reducing the Company’s outstanding debt obligations. See Note 2, Basis of Presentation, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
As discussed in Note 2, Basis of Presentation, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, we announced that our Board of Directors commenced a strategic review of the Company’s business and capital structure, in part to evaluate options to improve liquidity and reduce leverage. As part of this review, on January 30, 2026, we entered into a definitive agreement to sell our North American Snacks Business for $115,000, the net proceeds of which will be used to repay a portion of the Term Loans.
45
Table of Contents
The Company and the Board of Directors remain focused on completing the strategic review and taking decisive actions to strengthen the Company’s financial flexibility, improve performance and address the upcoming debt maturity under the Credit Agreement. These actions include a continued review of the Company’s portfolio and the pursuit of further asset sales to refine the Company’s operating model with a focus on categories and platforms in key markets. In addition, we are executing targeted inventory and other working capital optimization initiatives designed to improve the Company’s cash conversion and enhance liquidity. We also continue to actively engage with our lenders, assess opportunities to refinance the Company’s debt or extend the maturity under the Credit Agreement, and evaluate potential capital raising or other strategic transactions.
We believe that the successful execution of these plans will enable us to refinance and/or retire the existing debt prior to its maturity or extend the maturity date under the Credit Agreement. However, Accounting Standards Codification (“ASC”) 205-40, “Presentation of Financial Statements - Going Concern” requires that management not conclude that such an outcome is “probable” if, among other factors, the outcome is not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern for at least one year following the date of issuance of these financial statements due to the uncertainty regarding the Company’s ability to refinance or repay its debt due on December 22, 2026 because no such refinancing, retirement or extension has occurred prior to the issuance of the financial statements. Our ability to continue as a going concern remains subject to successful execution of our strategic plan and securing additional financing, if needed. If we are unable to execute our plans to generate sufficient liquidity, we may not have adequate resources to repay or refinance our debt, which would have a material adverse effect on our financial position and results of operations.
The consolidated financial statements have been prepared assuming that we will continue as a going concern, and no adjustments have been made to the financial statements to reflect the possibility of our inability to meet our debt obligations or continue as a going concern.
Amended and Restated Credit Agreement
On December 22, 2021, the Company entered into a Fourth Amended and Restated Credit Agreement (as subsequently amended, the “Credit Agreement”). The Credit Agreement originally provided for senior secured financing of $1,100.0 million in the aggregate, consisting of (1) $300.0 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800.0 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and was originally comprised of a $440.0 million U.S. revolving credit facility and $360.0 million global revolving credit facility) (the “Revolver”). Both the Revolver and the Term Loans mature on December 22, 2026. The Company’s obligations under the Credit Agreement are guaranteed by certain existing and future domestic subsidiaries of the Company and are secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interest in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions.
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. On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 until September 30, 2023, 5.25:1.00 until December 31, 2023, 5.00:1.00 until December 31, 2024, and 4.25:1.00 thereafter. See below for a description of the Third Amendment and Fourth Amendment (each as defined below). Following the Fourth Amendment, the Company’s maximum consolidated secured leverage ratio under the Credit Agreement was 5.00:1.00 until June 30, 2025 and is 5.50:1.00 for the quarter ending September 30, 2025 and thereafter. Pursuant to the Credit Agreement, the Company’s maximum consolidated leverage ratio is 6.00:1.00 and, through June 30, 2025, its minimum interest coverage ratio was 2.50:1.00.
As of September 30, 2025, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 4.81:1.00, 4.81:1.00 and 2.92:1.00, respectively, and the Company was in compliance with all associated covenants. The aforementioned financial covenants are being reported as calculated under the Credit Agreement and not pursuant to generally accepted accounting principles in the U.S. (“GAAP”). Please refer to the Credit Agreement and amendments filed as exhibits to our periodic reports for further information related to the calculation thereof. For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor “Any default under our credit agreement or inability to refinance our indebtedness could have significant consequences” set forth in Part I, Item 1A, “Risk Factors” of our Form 10-K for the fiscal year ended June 30, 2025.
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From the date of the Second Amendment until the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) the Secured Overnight Financing Rate plus a credit spread adjustment of 0.10% (“Term SOFR”) plus 2.5% per annum or (b) the Base Rate (as defined in the Credit Agreement) plus 1.5% per annum.
On May 5, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. Pursuant to the Third Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 4.75:1.00 for the quarter ending June 30, 2025 through (and including) the quarter ending March 31, 2026, 4.50:1.00 for the quarter ending June 30, 2026, and 4.25:1.00 for the quarter ending September 30, 2026 and thereafter.
Commencing on the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) Term SOFR plus 3.00% per annum or (b) the Base Rate plus 2.00% per annum.
The Third Amendment also reduced the size of the Revolver from $800.0 million to $700.0 million in the aggregate, with the U.S. revolving credit facility reduced from $440.0 million to $385.0 million and the global revolving credit facility reduced from $360.0 million to $315.0 million.
On September 11, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. Pursuant to the Fourth Amendment, (x) the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 for the quarter ending June 30, 2025 and 5.50:1.00 for the quarter ending September 30, 2025 and thereafter, (y) the Company’s minimum consolidated interest coverage ratio was amended to be 2.00:1.00 for the quarter ending September 30, 2025 and thereafter and (z) a covenant was added requiring the Company to maintain a minimum Consolidated EBITDA (as such term is defined in the Credit Agreement as amended by the Fourth Amendment) of (i) $17.0 million for the quarter ending September 30, 2025 and (ii) $52.0 million for the cumulative two quarters ending September 30, 2025 and on December 31, 2025. The aforementioned financial covenants use financial measures that are defined under the Credit Agreement and not pursuant to GAAP.
Commencing on the date of the Fourth Amendment, loans under the Credit Agreement bear interest at (a) Term SOFR plus 4.00% per annum or (b) the Base Rate plus 3.00% per annum.
The Fourth Amendment also reduced the size of the Revolver from $700.0 million to $600.0 million in the aggregate, with the U.S. revolving credit facility reduced from $385.0 million to $330.0 million and the global revolving credit facility reduced from $315.0 million to $270.0 million.
Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2025 was 8.26%. The Company uses interest rate swaps to hedge a portion of the interest rate risk related to its outstanding variable rate debt. As of December 31, 2025, the notional amount of the interest rate swaps was $400,000 with fixed rate payments of 7.12%. Including the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2025 was 7.71%. Additionally, the Credit Agreement contains a commitment fee of 0.25% per annum on the amount unused under the Credit Agreement.
Cash and Cash Equivalents
Our cash and cash equivalents balance increased by $13.6 million at December 31, 2025 to $68.0 million as compared to $54.4 million at June 30, 2025. Our working capital was negative $452.1 million at December 31, 2025, a decrease of $705.1 million from $252.9 million at the end of fiscal 2025. The decrease is driven by the classification of $705.8 million of debt obligations, maturing on December 22, 2026, as current. Additionally, our total debt balance, net of unamortized issuance costs, at December 31, 2025 has remained relatively flat as compared to June 30, 2025.
Our cash balances are held in the U.S., U.K., Canada, Western Europe, the Middle East and India. As of December 31, 2025, substantially all cash was held outside of the U.S.
We maintain our cash and cash equivalents primarily in money market funds or their equivalent. Accordingly, we do not believe that our investments have significant exposure to interest rate risk.
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Table of Contents
Cash Provided by (Used in) Operating, Investing and Financing Activities
|
|
Six Months Ended December 31, |
|
|
Change in |
|
||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
Dollars |
|
|||
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
28,488 |
|
|
$ |
20,118 |
|
|
$ |
8,370 |
|
Investing activities |
|
|
(10,433 |
) |
|
|
4,198 |
|
|
|
(14,631 |
) |
Financing activities |
|
|
(3,202 |
) |
|
|
(17,050 |
) |
|
|
13,848 |
|
Effect of exchange rate changes on cash |
|
|
(1,191 |
) |
|
|
(5,373 |
) |
|
|
4,182 |
|
Net increase in cash and cash equivalents |
|
$ |
13,662 |
|
|
$ |
1,893 |
|
|
$ |
11,769 |
|
Cash provided by operating activities was $28.5 million for the six months ended December 31, 2025, an increase of $8.4 million from cash provided by operating activities of $20.1 million in the prior year period. This increase in cash provided by operating activities versus the prior year period resulted primarily from a reduction of $8.4 million in net loss adjusted for non-cash charges in the six months ended December 31, 2025. Working capital changes, versus the prior year period, resulted in slightly higher cash generation primarily due to focused inventory management, which generated year- over-year improvement of $28.0 million and an increased benefit from accounts payable and accrued expenses in the amount of $18.6 million, offset by a decrease in accounts receivable and other assets recovery of $18.1 million and $28.5 million, respectively. The decrease in other assets primarily reflected the timing difference associated with the January 2026 collection of $25.9 million of insurance proceeds recognized in the first six months of fiscal 2026.
Cash used in investing activities was $10.4 million for the six months ended December 31, 2025, a change of $14.6 million from cash provided by investing activities of $4.2 million in the prior year period. The change in cash used by investing activities was primarily due to decrease in proceeds from asset sales of $12.0 million, primarily related to the sale of ParmCrisps®, and the receipt of a $2.6 million dividend from Hutchison Hain Organic Holdings Limited, a joint venture with HUTCHMED (China) Limited, each of which were received in the prior year period.
Cash used in financing activities was $3.2 million for the six months ended December 31, 2025, a decrease of $13.8 million compared to $17.1 million in the prior year period. The decrease in cash used in financing activities was primarily due to lower net borrowings during the six months ended December 31, 2025.
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Table of Contents
Free Cash Flow
Our free cash flow was $16.3 million for the six months ended December 31, 2025, an increase of $8.3 million from free cash flow of $8.0 million in the six months ended December 31, 2024. The period-over-period change resulted primarily from an increase in cash flows from operations of $8.4 million driven by the reasons explained above, partially offset by slightly higher capital expenditures. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations for definitions and a reconciliation from our net cash provided by operating activities to free cash flow.
Share Repurchase Program
In January 2022, the Company’s Board of Directors authorized the repurchase of up to $200.0 million of the Company’s issued and outstanding common stock. Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise. The current 2022 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 six months ended December 31, 2025, the Company did not repurchase any shares under the repurchase program. As of December 31, 2025, the Company had $173.5 million of remaining authorization under the share repurchase program.
Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures
We have included in this report measures of financial performance that are not defined by U.S. GAAP. We believe that these measures provide useful information to investors and include these measures in other communications to investors.
For each of these non-U.S. GAAP financial measures, we are providing below a reconciliation of the differences between the non-U.S. GAAP measure and the most directly comparable U.S. GAAP measure, an explanation of why our management and Board of Directors believe the non-U.S. GAAP measure provides useful information to investors and any additional purposes for which our management and Board of Directors use the non-U.S. GAAP measures. These non-U.S. GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measures.
Organic Net Sales
As noted above, we define organic net sales as net sales excluding the impact of acquisitions, divestitures, discontinued brands and exited product categories and foreign exchange. To adjust organic net sales for the impact of acquisitions, the net sales of an acquired business are excluded from fiscal quarters constituting or falling within the current period and prior period where the applicable fiscal quarter in the prior period did not include the acquired business for the entire quarter. To adjust organic net sales for the impact of divestitures, held for sale businesses, discontinued brands and exited product categories, the net sales of a divested business, held for sale business, discontinued brand or exited product category are excluded from all periods. To adjust organic net sales for the impact of foreign exchange, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year.
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Table of Contents
A reconciliation between reported net sales and organic net sales is as follows:
(Dollars in thousands) |
|
North |
|
|
International |
|
|
Hain |
|
|||
Net sales - Three months ended December 31, 2025 |
|
$ |
197,821 |
|
|
$ |
186,299 |
|
|
$ |
384,120 |
|
Less: Impact of held for sale businesses, discontinued brands and exited product categories |
|
|
12,704 |
|
|
|
780 |
|
|
|
13,484 |
|
Less: Impact of foreign currency exchange |
|
|
89 |
|
|
|
8,947 |
|
|
|
9,036 |
|
Organic net sales - Three months ended December 31, 2025 |
|
$ |
185,028 |
|
|
$ |
176,572 |
|
|
$ |
361,600 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net sales - Three months ended December 31, 2024 |
|
$ |
229,289 |
|
|
$ |
182,196 |
|
|
$ |
411,485 |
|
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories |
|
|
22,932 |
|
|
|
785 |
|
|
|
23,717 |
|
Organic net sales - Three months ended December 31, 2024 |
|
$ |
206,357 |
|
|
$ |
181,411 |
|
|
$ |
387,768 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net sales (decline) growth |
|
|
(13.7 |
)% |
|
|
2.3 |
% |
|
|
(6.7 |
)% |
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories |
|
|
(3.4 |
)% |
|
|
0.1 |
% |
|
|
(2.2 |
)% |
Less: Impact of foreign currency exchange |
|
|
0.0 |
% |
|
|
4.9 |
% |
|
|
2.2 |
% |
Organic net sales decline |
|
|
(10.3 |
)% |
|
|
(2.7 |
)% |
|
|
(6.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|||
Net sales - Six months ended December 31, 2025 |
|
$ |
401,741 |
|
|
$ |
350,262 |
|
|
$ |
752,003 |
|
Less: Impact of held for sale businesses, discontinued brands and exited product categories |
|
|
31,851 |
|
|
|
1,692 |
|
|
|
33,543 |
|
Less: Impact of foreign currency exchange |
|
|
(69 |
) |
|
|
15,662 |
|
|
|
15,593 |
|
Organic net sales - Six months ended December 31, 2025 |
|
$ |
369,959 |
|
|
$ |
332,908 |
|
|
$ |
702,867 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net sales - Six months ended December 31, 2024 |
|
$ |
460,429 |
|
|
$ |
345,652 |
|
|
$ |
806,081 |
|
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories |
|
|
54,699 |
|
|
|
2,051 |
|
|
|
56,750 |
|
Organic net sales - Six months ended December 31, 2024 |
|
$ |
405,730 |
|
|
$ |
343,601 |
|
|
$ |
749,331 |
|
|
|
|
|
|
|
|
|
|
|
|||
Net sales (decline) growth |
|
|
(12.7 |
)% |
|
|
1.3 |
% |
|
|
(6.7 |
)% |
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories |
|
|
(3.9 |
)% |
|
|
(0.1 |
)% |
|
|
(2.4 |
)% |
Less: Impact of foreign currency exchange |
|
|
(0.0 |
)% |
|
|
4.5 |
% |
|
|
1.9 |
% |
Organic net sales decline |
|
|
(8.8 |
)% |
|
|
(3.1 |
)% |
|
|
(6.2 |
)% |
Adjusted EBITDA
The Company defines Adjusted EBITDA as net loss before net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses (gains), proceeds from insurance claim, certain litigation expenses, net, plant closure related costs, net, productivity and transformation costs, costs associated with acquisitions, divestitures and other transactions, (gain) loss on sale of assets, impairment of goodwill, intangibles and long-lived assets and other adjustments. The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation. Adjusted EBITDA is a non-U.S. GAAP measure and may not be comparable to similarly titled measures reported by other companies.
We do not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP. The principal limitation of Adjusted EBITDA is that it excludes certain expenses and income that are required by U.S. GAAP to be recorded in our consolidated financial statements. In addition, Adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or included in
50
Table of Contents
determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with U.S. GAAP results.
A reconciliation of net loss to Adjusted EBITDA is as follows:
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net loss |
|
$ |
(116,006 |
) |
|
$ |
(103,975 |
) |
|
$ |
(136,631 |
) |
|
$ |
(123,638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
11,149 |
|
|
|
11,020 |
|
|
|
26,560 |
|
|
|
22,447 |
|
Equity in net loss of equity-method investees |
|
|
133 |
|
|
|
588 |
|
|
|
306 |
|
|
|
743 |
|
Interest expense, net |
|
|
14,066 |
|
|
|
11,993 |
|
|
|
27,208 |
|
|
|
24,988 |
|
Provision for income taxes |
|
|
2,386 |
|
|
|
2,728 |
|
|
|
1,130 |
|
|
|
6,251 |
|
Stock-based compensation, net |
|
|
1,051 |
|
|
|
3,573 |
|
|
|
3,054 |
|
|
|
6,449 |
|
Unrealized currency losses (gains) |
|
|
139 |
|
|
|
(1,624 |
) |
|
|
404 |
|
|
|
(430 |
) |
Proceeds from insurance claim(a) |
|
|
(25,900 |
) |
|
|
— |
|
|
|
(25,900 |
) |
|
|
— |
|
Certain litigation expenses, net(b) |
|
|
(182 |
) |
|
|
1,020 |
|
|
645 |
|
|
|
1,847 |
|
|
Restructuring activities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Productivity and transformation costs |
|
|
5,234 |
|
|
|
4,190 |
|
|
|
13,453 |
|
|
|
9,208 |
|
Plant closure related costs, net |
|
|
520 |
|
|
|
858 |
|
|
|
806 |
|
|
|
1,234 |
|
Acquisitions, divestitures and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Transaction and integration costs, net |
|
|
1,009 |
|
|
|
(105 |
) |
|
|
3,182 |
|
|
|
(423 |
) |
(Gain) loss on sale of assets |
|
|
(1,142 |
) |
|
|
(1,626 |
) |
|
|
(2,028 |
) |
|
|
2,308 |
|
Impairment charges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment |
|
|
119,908 |
|
|
|
91,267 |
|
|
|
119,908 |
|
|
|
91,267 |
|
Intangibles and long-lived asset impairment |
|
|
11,917 |
|
|
|
17,986 |
|
|
|
11,917 |
|
|
|
18,017 |
|
Adjusted EBITDA |
|
$ |
24,282 |
|
|
$ |
37,893 |
|
|
$ |
44,014 |
|
|
$ |
60,268 |
|
Free Cash Flow
In our internal evaluations, we use the non-GAAP financial measure “Free Cash Flow.” The difference between Free Cash Flow and cash flows used in or provided by operating activities, which is the most comparable U.S. GAAP financial measure, is that Free Cash Flow reflects the impact of purchases of property, plant and equipment (capital spending). Since capital spending is essential to maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider capital spending when evaluating our cash flows provided by or used in operating activities. We view Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider Free Cash Flow in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP.
A reconciliation from cash flows provided by operating activities to Free Cash Flow is as follows:
|
|
Six Months Ended December 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Net cash provided by operating activities |
|
$ |
28,488 |
|
|
$ |
20,118 |
|
Purchases of property, plant and equipment |
|
|
(12,215 |
) |
|
|
(12,139 |
) |
Free Cash Flow |
|
$ |
16,273 |
|
|
$ |
7,979 |
|
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Table of Contents
Critical Accounting Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The accounting principles we use require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonableness of our critical accounting policies; however, materially different amounts may be reported under different conditions or using assumptions different from those that we have applied. The accounting policies that have been identified as critical to our business operations and to understanding the results of our operations pertain to variable consideration, valuation of long-lived assets, goodwill and intangible assets, stock-based compensation and valuation allowances for deferred tax assets. The application of each of these critical accounting policies and estimates is discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, from which there have been no material changes. We are providing the below update regarding goodwill and indefinite-lived intangible assets.
Goodwill
In each quarter subsequent to our annual impairment assessment, we review events that occur or circumstances that change, including the macroeconomic environment, our business performance and our market capitalization, to determine if a quantitative impairment assessment is necessary. If assumptions are not achieved or market conditions decline, potential impairment charges could result. Impairments to goodwill and other intangible assets may be caused by factors outside our control, such as increasing competitive pricing pressures, changes in discount rates based on changes in cost of capital (i.e., as a result of changes in interest rates or other conditions), lower than expected sales and profit growth rates, changes in industry EBITDA multiples, the inability to quickly replace lost co-manufacturing business, or the bankruptcy of a significant customer, among others.
As of December 31, 2025, the Company performed an assessment of factors to determine whether it was more likely than not that the fair value of each reporting unit within both of the North America and International reportable segments was less than its respective carrying amount, including goodwill. As a result of a continued decline in the projected performance and cash flows of the U.S. reporting unit, and in connection with the pending agreement to sell its North American Snacks Business, the Company completed an interim quantitative impairment test of goodwill. As a result of the recognition of an intangible asset impairment charge within the United Kingdom (“U.K.”) reporting unit in the International reportable segment and a continued decline in the projected performance and cash flows of the U.K. reporting unit, the Company also completed an interim quantitative impairment test of goodwill. For the Western Europe and Ella’s Kitchen UK reporting units, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount, including goodwill. The Company concluded that the qualitatively tested reporting units’ estimated fair values exceeded their carrying amounts.
In performing the quantitative tests for the U.S. and U.K., the fair values were estimated using the Discounted Cash Flow (“DCF”) method income approach as such method was determined to be more representative of future performance from a market participant point of view. As of December 31, 2025, the U.S. reporting unit’s carrying amount exceeded its estimated fair value of $459,000, resulting in the recognition of a non-cash impairment charge of $38,495 to reduce the carrying value of the U.S. reporting unit goodwill to $273,826. As of December 31, 2025, the U.K. reporting unit’s carrying amount exceeded its estimated fair value of $270,525, resulting in the recognition of a non-cash impairment charge of $81,413 to reduce the carrying value of the U.K. reporting unit goodwill to $32,331. The U.K. reporting unit’s impairment charge reflected the sales volume decline that the Company continued to experience. The discount rate in both quantitative tests also reflected an increase in the small stock premium related to a decline in the Company’s market capitalization.
The goodwill related to the U.S. and U.K. reporting units remains at risk of potential impairment if the fair value of these reporting units, and their associated assets, decrease in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company’s estimates. If the Company’s ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the
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terminal growth rate or the weighted-average cost of capital, the Company may have to record additional impairment charges in future periods. We monitor our reporting units at risk of impairment for interim impairment indicators.
As of December 31, 2025, we considered our market capitalization and our net book value and performed a market capitalization reconciliation with the expectation that the market capitalization should reconcile within a reasonable range to the sum of the fair values of the Company's individual reporting units. Upon performing the market capitalization reconciliation, we noted a reasonable reconciliation between the sum of the reporting unit fair values and the Company’s market capitalization once adjusted for the impact of corporate costs not allocated to the reporting units. Refer to the critical accounting policies and estimates section included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Indefinite-Lived Intangible Assets
The Company performs an indefinite-lived asset impairment test annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In accordance with ASC 350, we may first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test. If an entity elects to perform a qualitative assessment, it first shall assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired. One procedure we perform during interim periods to determine whether indicators of impairment are present includes a comparison of net sales used in the most recent quantitative impairment tests to forecasted net sales for the same fiscal year (or balance of the fiscal year when performing an interim review) in order to identify brands for which the current fiscal year net sales are expected to be lower than the forecasted fiscal year net sales per the latest quantitative test. The performance of these brands is then reviewed by management to determine if the shortfall to forecasted net sales was related to events and circumstances that are expected to be temporary in nature, or if it were caused by more pervasive issue that could serve as in impairment indicator (e.g., loss of key customers, discontinuance of certain product categories within a brand, etc.). We use this risk-based approach to determine which brands we would quantitatively test for impairment, whether as part of fiscal year annual impairment testing or an interim period test.
During the second quarter of 2026, we qualitatively assessed our indefinite-lived intangible assets for impairment and determined that the Ella’s Kitchen® baby and kids foods and Hartley’s® jelly indefinite-lived tradenames should be quantitatively tested. The Company’s fiscal year 2026 interim impairment testing resulted in the recognition of impairment charges for the Hartley’s® jelly indefinite-lived tradename.
During the three months ended December 31, 2025, as a result of a continued decline in net sales driven by industry-wide volume softness for purees within the U.K., the Company conducted an interim quantitative impairment test for its Ella’s Kitchen® baby and kids foods indefinite-lived tradename. The Company concluded that the indefinite-lived intangible asset estimated fair value exceeded its carrying amount by 12.8%. The intangible asset is part of the International reportable segment and had a carrying value of $35,801 as of December 31, 2025.
During the three months ended December 31, 2025, as a result of continued decline in net sales, the Company conducted an interim quantitative impairment test for the Hartley’s® jelly indefinite-lived tradename. The Company concluded that the indefinite-lived tradename carrying amount exceeded its estimated fair value. During the three months ended December 31, 2025, the Company recorded a non-cash impairment charge of $11,917 which was recorded within intangibles and long-lived asset impairment on the consolidated statement of operations. The Hartley’s® jelly indefinite-lived intangible asset is part of the International reportable segment and had a remaining carrying value of $37,685 as of December 31, 2025.
The Ella’s Kitchen® baby and kids foods, Hartley’s® jelly, Sensible Portions®, and Spectrum® indefinite-lived tradenames remain at risk of impairment in future periods in the event of unfavorable changes in assumptions, including forecasted future cash flows based on execution of strategic initiatives for increasing revenue, as well as discount rates and other macroeconomic factors. The Sensible Portions® and Spectrum® intangible assets, which were quantitatively tested in the prior year, are part of the North America reportable segment and have remaining carrying value of $8,000 and $11,800, respectively, as of December 31, 2025.
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Recent Accounting Pronouncements
Refer to Note 2, Basis of Presentation, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Seasonality
Certain of our product lines have seasonal fluctuations. Hot tea and soup sales are stronger in colder months, while sales of snack foods are stronger in the warmer months. As such, our results of operations and our cash flows for any particular quarter are not indicative of the results we expect for the full year, and our historical seasonality may not be indicative of future quarterly results of operations. Historically, net sales and profitability in the first fiscal quarter have typically been the lowest of our four quarters.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes in market risk from those addressed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, during the three months ended December 31, 2025. See the information set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with the assistance of other members of management, have performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our CEO and CFO have concluded that, as of December 31, 2025, the Company’s disclosure controls and procedures were not effective due to the material weakness related to our controls to review goodwill and indefinite-lived intangible asset quantitative impairment tests that were performed throughout the prior fiscal year, identified and described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Notwithstanding the material weakness, and based on the additional analyses and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S. GAAP, our management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.
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Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting
The Company is in the process of improving its policies and procedures relating to the design and operating effectiveness of controls to review on a timely basis and in sufficient detail the projected financial information and certain key assumptions and underlying calculations used in goodwill and indefinite-lived intangible asset quantitative impairment tests.
Management is taking actions to implement new or enhance existing controls and procedures to ensure proper and timely review of business activities impacting the projected financial information and certain key assumptions and underlying calculations used in preparing goodwill and indefinite-lived intangible asset quantitative impairment tests. The material weaknesses will be considered remediated when the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We anticipate that the remediation will occur by the end of fiscal 2026. We continue to monitor the design and operation of these remedial measures through the date of this report.
Changes in Internal Control Over Financial Reporting
Other than the actions taken under “Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting” discussed above, there were no changes in our internal controls over financial reporting that occurred during the three months ended December 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The information called for by this item is incorporated herein by reference to Note 17, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the discussion of the material factors contained in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 15, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
During the three months ended December 31, 2025, there were no shares repurchased under share repurchase programs approved by the Board of Directors.
During the three months ended December 31, 2025, there were 222,709 shares withheld by the Company to satisfy tax withholding obligations in connection with shares issued under stock-based compensation plans, at an average price of $1.29 per share. These shares withheld to satisfy tax withholding obligations do not constitute repurchases by the Company.
Item 5. Other Information
Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements
During the three months ended December 31, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended),
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Item 6. Exhibits
Exhibit Number |
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Description |
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3.1 |
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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). |
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3.2 |
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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 December 31, 2024, filed with the SEC on February 10, 2025). |
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4.1 |
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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). |
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10.1* |
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Second Amendment to The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2025). |
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10.2* |
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Form of Restricted Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan – 2026-2028 LTIP. |
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10.3* |
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Form of Performance Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan – 2026-2028 LTIP (Relative Total Shareholder Return). |
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10.4* |
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Form of Performance Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan – 2026-2028 LTIP (Adjusted EBITDA Margin). |
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10.5* |
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Form of Performance Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan – 2026-2028 LTIP (Unlevered Free Cash Flow). |
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10.6* |
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Form of Restricted Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan – Non-Employee Director Awards. |
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10.7* |
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Restricted Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan - Alison E. Lewis. |
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10.8* |
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Performance Share Unit Agreement under The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan - Alison E. Lewis. |
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10.9* |
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Employment Agreement, dated as of December 12, 2025, by and between The Hain Celestial Group, Inc. and Alison E. Lewis (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2025). |
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10.10* |
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Change in Control Agreement, dated as of December 12, 2025, by and between The Hain Celestial Group, Inc. and Alison E. Lewis (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2025). |
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31.1 |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
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31.2 |
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. |
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32.1 |
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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. |
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32.2 |
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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.INS |
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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|
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Indicates management contract or compensatory plan or arrangement.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
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THE HAIN CELESTIAL GROUP, INC. |
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(Registrant) |
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Date: |
February 9, 2026 |
/s/ Alison E. Lewis |
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Alison E. Lewis, President and Chief Executive Officer (Principal Executive Officer) |
Date: |
February 9, 2026 |
/s/ Lee A. Boyce |
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Lee A. Boyce, Chief Financial Officer (Principal Financial Officer) |
Date: |
February 9, 2026 |
/s/ Michael J. Ragusa |
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Michael J. Ragusa, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) |
59
FAQ
How did Hain Celestial (HAIN) perform financially in the quarter ended December 31, 2025?
Hain Celestial reported quarterly net sales of
What major impairments did Hain Celestial (HAIN) record in this 10-Q?
The company recorded goodwill impairment charges totaling
Why does Hain Celestial (HAIN) disclose substantial doubt about continuing as a going concern?
As of
What strategic actions and asset sales is Hain Celestial (HAIN) pursuing?
The company is conducting a strategic portfolio and capital structure review. On
How much debt and interest cost does Hain Celestial (HAIN) have?
Hain Celestial had
What were Hain Celestial’s (HAIN) cash flow trends for the six months ended December 31, 2025?
The company generated
What restructuring and transformation costs did Hain Celestial (HAIN) incur?
Under its multi‑year restructuring program, Hain Celestial recorded
