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 March 31, 2026 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”), 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 beverages, yogurt, baby/kids 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 Celestial Seasonings® teas, The Greek Gods® yogurt, Earth's Best® Organic and Ella’s Kitchen® baby and kids foods, Joya® and Natumi® plant-based beverages, Hartley’s® jelly, as well as Cully & Sully®, Yorkshire Provender®, and New Covent Garden® 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 February 27, 2026, we completed the sale (the “Transaction”) of our 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”) and received $111.2 million in cash, reflecting the total purchase price of $115.0 million less the holdback of an estimate for a customary inventory adjustment, which is subject to finalization following the closing. We used the net proceeds of $101.1 million from the Transaction to pay down debt. The Transaction represents an important first step in our broader strategic review, as it reduced leverage while enabling us to focus on a more concentrated portfolio of core assets to drive growth.
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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 nine months ended March 31, 2026, we incurred pretax charges of $4.8 million and $22.1 million respectively, associated with the Restructuring Program, compared to approximately $7.7 million and $20.4 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, changes in interest rates, evolving fiscal and monetary policies, global supply chain constraints, and changes in U.S. and international trade restrictions and tariffs continue to create economic uncertainty and cost pressures across global markets.
Geopolitical tensions, including the conflict in Iran that began in February 2026, have disrupted and could continue to disrupt global energy supply‑demand dynamics, contributing to commodity price volatility and broader uncertainty. These conditions could adversely affect energy prices, transportation routes, logistics and insurance costs, global supply chains, input costs, and consumer spending patterns, which could impact our operating results, liquidity, and cash flows if such conditions persist or escalate. We continue to monitor the evolving macroeconomic and geopolitical environment and assess potential impacts on our business.
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Comparison of Three Months Ended March 31, 2026 to Three Months Ended March 31, 2025
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 March 31, 2026 and 2025 (dollars in thousands, other than per share amounts and percentages, which may not add due to rounding):
Three Months Ended Change in
March 31, 2026 March 31, 2025 Dollars Percentage
Net sales $ 338,357 100.0 % $ 390,351 100.0 % $ (51,994 ) (13.3 )%
Cost of sales 267,965 79.2 % 305,701 78.3 % (37,736 ) (12.3 )%
Gross profit 70,392 20.8 % 84,650 21.7 % (14,258 ) (16.8 )%
Selling, general and administrative expenses 59,078 17.5 % 62,934 16.1 % (3,856 ) (6.1 )%
Goodwill impairment 31,018 9.2 % 110,251 28.2 % (79,233 ) (71.9 )%
Long-lived asset and intangibles impairment 15,047 4.4 % 24,012 6.2 % (8,965 ) (37.3 )%
Productivity and transformation costs 4,066 1.2 % 7,289 1.9 % (3,223 ) (44.2 )%
Amortization of acquired intangible assets 3,314 1.0 % 1,243 0.3 % 2,071 166.6 %
Operating loss (42,131 ) (12.5 )% (121,079 ) (31.0 )% 78,948 (65.2 )%
Interest and other financing expense, net 13,914 4.1 % 11,866 3.0 % 2,048 17.3 %
Other expense, net 49,518 14.6 % 1,182 0.3 % 48,336 **
Loss before income taxes and equity in net loss of equity-method investees (105,563 ) (31.2 )% (134,127 ) (34.4 )% 28,564 (21.3 )%
Provision (benefit) for income taxes 759 0.2 % (505 ) (0.1 )% 1,264 *
Equity in net loss of equity-method investees 21 0.0 % 966 0.2 % (945 ) (97.8 )%
Net loss $ (106,343 ) (31.4 )% $ (134,588 ) (34.5 )% $ 28,245 (21.0 )%
Adjusted EBITDA $ 26,252 7.8 % $ 33,615 8.6 % $ (7,363 ) (21.9 )%
Diluted net loss per common share $ (1.17 ) $ (1.49 ) $ 0.32 (21.6 )%
* Percentage is not meaningful due to one or more numbers being negative.
** Percentage is not meaningful due to significantly lower number or nil value in the comparative period.
Net Sales
Net sales for the three months ended March 31, 2026 were $338.4 million, a decrease of $52.0 million, or 13.3%, including a reduction of $48.3 million, or 10.8%, related to divestitures, held for sale businesses, discontinued brands and exited product categories primarily due to sale of the North American Snacks Business and a favorable impact of $12.5 million, or 3.2%, from foreign exchange, as compared to the prior year quarter. Organic net sales, defined as net sales adjusted to exclude the impact of foreign exchange, acquisitions, divestitures, held for sale businesses, discontinued brands and exited product categories, decreased $16.2 million, or 5.7%, from the prior year quarter. The decrease in organic net sales was due to a decline in both the North America and International reportable segments.
Additionally, the decrease in organic net sales comprised a 10.6% decrease in volume/mix, partially offset by a 4.9% increase in pricing primarily reflecting promotional activity. 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 March 31, 2026 was $70.4 million, a decrease of $14.3 million, or 16.8%, as compared to the prior year period. Gross profit margin of 20.8% for the three months ended March 31, 2026 was lower when compared with 21.7% in the prior year period, representing a 90-basis point decrease.
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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, partially offset by favorable pricing. The decline in the International reportable segment was mainly driven by lower sales volume, partially offset by productivity savings.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $59.1 million for the three months ended March 31, 2026, a decrease of $3.9 million, or 6.1%, from $62.9 million for the prior year quarter. The decrease was primarily driven by a reduction in employee-related expenses.
Goodwill Impairment
During the three months ended March 31, 2026, the Company recognized a non-cash goodwill impairment charge of $31.0 million related to its U.K. reporting unit. During the three months ended March 31, 2025, the Company recorded aggregate non-cash goodwill impairment charges of $110.3 million within the North America segment related to its U.S. and Canada reporting units. 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.
Long-Lived Asset and Intangibles Impairment
During the three months ended March 31, 2026, the Company recorded non-cash impairment charges of $12.4 million, primarily related to a reduction in the estimated fair value of the personal care assets held for sale. See Note 4, Assets and Liabilities Held for Sale, in the Notes of the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. During the three months ended March 31, 2026, the Company also recognized aggregate non-cash impairment charges of $2.0 million primarily related to Earth’s Best® Organic indefinite-lived tradename. See Note 9, Goodwill and Other Intangible Assets, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
During the three months ended March 31, 2025, the Company recorded non-cash impairment charges of $24.0 million, primarily related to the personal care assets held for sale. See Note 4, Assets and Liabilities Held for Sale 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 $4.1 million for the three months ended March 31, 2026, a decrease of $3.2 million, or 44.2%, from $7.3 million in the prior year quarter. The decrease primarily reflected a reduction in restructuring costs incurred in connection with the Restructuring Program.
Amortization of Acquired Intangible Assets
Amortization of acquired intangibles was $3.3 million for the three months ended March 31, 2026 compared to $1.2 million for the prior year quarter. During the three months ended March 31, 2026, the useful life for certain meal preparation category tradenames (namely, Hartley’s® Jelly and Spectrum® culinary oils, vinegars and condiments) and the trademark for the baby and kids category brand, Ella’s Kitchen® baby and kids foods was changed from indefinite to definite.
Operating Loss
Operating loss for the three months ended March 31, 2026 was $42.1 million compared to operating loss of $121.1 million in the prior year quarter as a result of the items described above.
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Interest and Other Financing Expense, Net
Interest and other financing expense, net totaled $13.9 million for the three months ended March 31, 2026, an increase of $2.0 million, or 17.3%, from $11.9 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, and a write-off of $0.5 million of deferred financing fees in connection with the $101.1 million repayment of the Term Loans, partially offset by lower outstanding debt balance compared to the prior year period. 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 Expense, Net
Other expense, net totaled $49.5 million for the three months ended March 31, 2026 compared to $1.2 million in the prior year quarter. The change was primarily due to the recognition of a pretax loss of $50.8 million on the sale of the North American Snacks Business in the third quarter of fiscal 2026.
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 March 31, 2026 was $105.6 million compared to $134.1 million in the prior year quarter. The decrease in the loss before income taxes and equity in net loss of our equity-method investees was due to the items discussed above.
Provision (Benefit) for Income Taxes
The provision (benefit) for income taxes includes federal, foreign, state and local income taxes. Our income tax expense was $0.8 million for the three months ended March 31, 2026 compared to income tax benefit of $0.5 million in the prior year quarter.
The effective income tax rate was an expense of 0.7% and a benefit of 0.4% for the three months ended March 31, 2026 and 2025, respectively. The income tax expense for the three months ended March 31, 2026 reflected foreign tax expense in certain jurisdictions, impairment of goodwill and intangibles, the sale of the North American Snacks Business and movement in the valuation allowance for both federal and state income taxes. The effective income tax rate for the three months ended March 31, 2025 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 March 31, 2026 decreased by $1.0 million compared to $1.0 in the prior year quarter.
Net Loss
Net loss for the three months ended March 31, 2026 was $106.3 million, or $1.17 per diluted share, compared to $134.6 million, or $1.49 per diluted share, in the prior year quarter. The decrease in net loss was attributable to the factors noted above.
Adjusted EBITDA
Adjusted EBITDA was $26.3 million and $33.6 million for the three months ended March 31, 2026 and 2025, 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.
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Segment Results
The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the three months ended March 31, 2026 and 2025:
(Dollars in thousands) North America International Corporate and Other Consolidated
Net sales
Three months ended 3/31/26 $ 171,495 $ 166,862 $ — $ 338,357
Three months ended 3/31/25 222,407 167,944 — 390,351
$ change $ (50,912 ) $ (1,082 ) n/a $ (51,994 )
% change (22.9 )% (0.6 )% n/a (13.3 )%
Adjusted EBITDA
Three months ended 3/31/26 $ 17,171 $ 19,580 $ (10,499 ) $ 26,252
Three months ended 3/31/25 17,306 22,166 (5,857 ) 33,615
$ change $ (135 ) $ (2,586 ) $ (4,642 ) $ (7,363 )
% change (0.8 )% (11.7 )% (79.3 )% (21.9 )%
Adjusted EBITDA margin
Three months ended 3/31/26 10.0 % 11.7 % 7.8 %
Three months ended 3/31/25 7.8 % 13.2 % n/a 8.6 %
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 March 31, 2026 were $171.5 million, a decrease of $50.9 million, or 22.9%, including a reduction of $48.0 million, or 20.3%, related to divestitures, held for sale businesses, discontinued brands and exited product categories, as compared to the prior year quarter. Organic net sales decreased $3.2 million, or 2.7%, to $113.7 million from $116.9 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. The decrease in organic net sales was primarily due to lower sales in the baby & kids category, partially offset by growth in the beverages category. The decrease in the baby & kids category was driven by volume softness in purees and formula, partially offset by growth in The Greek Gods® yogurt.
Adjusted EBITDA for the three months ended March 31, 2026 was $17.2 million, a slight decrease of $0.1 million, or 0.8%, from Adjusted EBITDA of $17.3 million in the prior year quarter. The decrease was primarily driven by lower volume/mix and cost inflation, nearly offset by SG&A, pricing and productivity savings. Adjusted EBITDA margin was 10.0%, a 220-basis point increase from the prior year period.
International
Our net sales in the International reportable segment for the three months ended March 31, 2026 were $166.9 million, a decrease of $1.1 million, or 0.6%, including a favorable impact of $12.2 million, or 7.3%, related to foreign exchange, as compared to the prior year quarter. Organic net sales decreased $13.0 million, or 7.8%, to $153.7 million from $166.8 million the prior year quarter.
The decrease in net sales was primarily due to lower sales in the baby & kids and snacks categories, partially offset by an increase in the beverage category. The decrease in organic net sales was primarily due to decreases in the meal preparation and baby & kids categories. The decrease in the meal preparation category was due to weak soup performance across brands and volume
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softness in meat alternatives and private label spreads and drizzles. The decrease in the baby & kids category was primarily driven by continued industry-wide volume softness in purees in the U.K.
Adjusted EBITDA for the three months ended March 31, 2026 was $19.6 million, a decrease of $2.6 million, or 11.7%, from Adjusted EBITDA of $22.2 million in the prior year quarter. The decrease was primarily driven by cost inflation and lower volume/mix, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 11.7%, a 150-basis point decrease from the prior year period.
Corporate and Other
The increase in Corporate and Other expenses primarily due to timing of incentive reserves.
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 Nine Months Ended March 31, 2026 to Nine Months Ended March 31, 2025
Consolidated Results
The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the nine months ended March 31, 2026 and 2025 (amounts in thousands, other than per share data and percentages, which may not add due to rounding):
Nine Months Ended Change in
March 31, 2026 March 31, 2025 Dollars Percentage
Net sales $ 1,090,360 100.0 % $ 1,196,432 100.0 % $ (106,072 ) (8.9 )%
Cost of sales 877,451 80.5 % 936,720 78.3 % (59,269 ) (6.3 )%
Gross profit 212,909 19.5 % 259,712 21.7 % (46,803 ) (18.0 )%
Selling, general and administrative expenses 185,493 17.0 % 204,417 17.1 % (18,924 ) (9.3 )%
Goodwill impairment 150,926 13.8 % 201,518 16.8 % (50,592 ) (25.1 )%
Long-lived asset and intangibles impairment 26,964 2.5 % 42,029 3.5 % (15,065 ) (35.8 )%
Productivity and transformation costs 17,519 1.6 % 16,497 1.4 % 1,022 6.2 %
Amortization of acquired intangible assets 5,725 0.5 % 5,176 0.4 % 549 10.6 %
Proceeds from insurance claim (25,900 ) (2.4 )% — — (25,900 ) 100.0 %
Operating loss (147,818 ) (13.6 )% (209,925 ) (17.5 )% 62,107 (29.6 )%
Interest and other financing expense, net 45,075 4.1 % 38,412 3.2 % 6,663 17.3 %
Other expense, net 47,865 4.4 % 2,434 0.2 % 45,431 **
Loss before income taxes and equity in net loss of equity-method investees (240,758 ) (22.1 )% (250,771 ) (21.0 )% 10,013 (4.0 )%
Provision for income taxes 1,889 0.2 % 5,746 0.5 % (3,857 ) (67.1 )%
Equity in net loss of equity-method investees 327 0.0 % 1,709 0.1 % (1,382 ) (80.9 )%
Net loss $ (242,974 ) (22.3 )% $ (258,226 ) (21.6 )% $ 15,252 (5.9 )%
Adjusted EBITDA $ 70,266 6.4 % $ 93,883 7.8 % $ (23,617 ) (25.2 )%
Diluted net loss per common share $ (2.68 ) $ (2.87 ) $ 0.19 (6.5 )%
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** Percentage is not meaningful due to significantly lower number or nil value in the comparative period.
Net Sales
Net sales for the nine months ended March 31, 2026 were $1,090.4 million, a decrease of $106.1 million, or 8.9%, including a reduction of $104.9 million, or 7.9%, related to divestitures, held for sale businesses, discontinued brands and exited product categories and a favorable impact of $28.2 million, or 2.4%, from foreign exchange, as compared to the prior year period. Organic net sales decreased $29.3 million, or 3.4%, from the prior year period. The decrease in net sales was primarily due to a decline in the North America reportable segment. The decrease in organic net sales was due to declines in both the North America and International reportable segments. Additionally, the decrease in organic net sales was comprised of a 6.7% decrease in volume/mix and a 3.3% 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 nine months ended March 31, 2026 was $212.9 million, a decrease of $46.8 million, or 18.0%, as compared to the prior year period. The gross profit margin of 19.5% was lower for the nine months ended March 31, 2026, when 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 decrease in the North America reportable segment was mainly due to lower sales volume and unfavorable product mix, partially offset by favorable pricing and trade efficiencies. The International reportable segment had a decrease in gross profit mainly due to cost inflation and lower sales volume, partially offset by favorable product mix.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $185.5 million for the nine months ended March 31, 2026, a decrease of $18.9 million, or 9.3%, from $204.4 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 nine months ended March 31, 2026, the Company recognized aggregate non-cash goodwill impairment charges of $150.9 million related to its U.S. and U.K. reporting units. During the nine months ended March 31, 2025, the Company recorded aggregate non-cash goodwill impairment charges of $201.5 million within the North America segment related to its U.S. and Canada reporting units. 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.
Long-Lived Asset and Intangibles Impairment
During the nine months ended March 31, 2026, the Company recorded non-cash impairment charges of $11.4 million, primarily related to the personal care assets held for sale. See Note 4, Assets and Liabilities Held for Sale, in the Notes of the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. Further, during the nine months ended March 31, 2026, the Company recorded a non-cash impairment charge of $11.9 million related to the Hartley’s® jelly indefinite-lived intangible asset and $2.0 million related to Earth’s Best® Organic indefinite-lived tradename. See Note 9, Goodwill and Other Intangible Assets, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
During the nine months ended March 31, 2025, the Company recorded a non-cash impairment charge of $42.0 million, primarily related to the personal care assets held for sale and indefinite and definite-lived intangible assets associated with its personal care business. See Note 4, Assets and Liabilities Held for Sale, and Note 9, Goodwill and Other Intangible Assets, in the Notes of the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q
Productivity and Transformation Costs
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Productivity and transformation costs were $17.5 million for the nine months ended March 31, 2026, an increase of $1.0 million, or 6.2%, from $16.5 million in the prior year period. 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 $5.7 million for the nine months ended March 31, 2026, an increase of $0.5 million from $5.2 million in the prior year period. During the nine months ended March 31, 2026, the useful life for certain International meal prep tradenames, (namely, Hartley’s® Jelly and Spectrum® culinary oils, vinegars and condiments) and the trademark for the baby and kids category brand, Ella’s Kitchen® baby and kids foods, was changed from indefinite to definite.
Proceeds from Insurance Claim
Proceeds from insurance claim was $25.9 million for the nine months ended March 31, 2026 on account of the recognition of a Representation & Warranty (“R&W”) insurance receivable related to a prior acquisition, which was collected on January 2, 2026.
Operating Loss
Operating loss for the nine months ended March 31, 2026 was $147.8 million compared to $209.9 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 $45.1 million for the nine months ended March 31, 2026, an increase of $6.7 million, or 17.3%, from $38.4 million in the prior year period. 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, partially offset by lower outstanding debt balance compared to the prior year period. 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 Expense, Net
Other expense, net totaled $47.9 million for the nine months ended March 31, 2026, compared to $2.4 million of other income, net in the prior year period. The change was primarily due to a pretax loss of $50.8 million on the sale of North American Snacks Business.
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 $240.8 million for the nine months ended March 31, 2026, compared to a $250.8 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 provision was $1.9 million for the nine months ended March 31, 2026 compared to income tax expense of $5.7 million in the prior year comparable period.
The effective income tax rate was an expense of 0.8% and an expense of 2.3% for the nine months ended March 31, 2026 and 2025, respectively. The income tax provision for the nine months ended March 31, 2026 reflected foreign tax expense in certain jurisdictions, the sale of the North American Snacks Business, the receipt of the R&W insurance payout related to a prior acquisition, impairment of goodwill and intangibles and movement in the valuation allowance for both federal and state income taxes. The effective income tax rate for the nine months ended March 31, 2025 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.
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Equity in Net Loss of Equity-Method Investees
Equity in net loss from our equity-method investments for the nine months ended March 31, 2026 was a loss of $0.3 million compared to a $1.7 million loss in the prior year period.
Net Loss
Net loss for the nine months ended March 31, 2026 was $243.0 million, or $2.68 per diluted share, compared to $258.2 million, or $2.87 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 $70.3 million and $93.9 million for the nine months ended March 31, 2026 and 2025, 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 nine months ended March 31, 2026 and 2025:
(Dollars in thousands) North America International Corporate and Other Consolidated
Net sales
Nine months ended 3/31/26 $ 573,236 $ 517,124 $ — $ 1,090,360
Nine months ended 3/31/25 682,836 513,596 — 1,196,432
$ change $ (109,600 ) $ 3,528 n/a $ (106,072 )
% change (16.1 )% 0.7 % n/a (8.9 )%
Adjusted EBITDA
Nine months ended 3/31/26 $ 45,091 $ 51,133 $ (25,958 ) $ 70,266
Nine months ended 3/31/25 55,072 65,062 (26,251 ) 93,883
$ change $ (9,981 ) $ (13,929 ) $ 293 $ (23,617 )
% change (18.1 )% (21.4 )% 1.1 % (25.2 )%
Adjusted EBITDA margin
Nine months ended 3/31/26 7.9 % 9.9 % 6.4 %
Nine months ended 3/31/25 8.1 % 12.7 % n/a 7.8 %
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 nine months ended March 31, 2026 were $573.2 million, a decrease of $109.6 million, or 16.1%, including an unfavorable impact of $104.2 million, or 14.5%, related to divestitures, held for sale businesses, discontinued brands and exited product categories, as compared to the prior year period. Organic net sales decreased $5.7 million, or 1.6%, to $346.3 million from $352.0 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 baby & kids and meal preparation categories, partially offset by an increase in the beverages category. The baby & kids category organic net sales decline was primarily driven by volume softness in purees and formula. The meal preparation category organic net sales decline was due to velocity challenges and distribution losses of soup and oil brands, partially offset by growth in The Greek Gods® yogurt.
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Adjusted EBITDA for the nine months ended March 31, 2026 was $45.1 million, a decrease of $10.0 million, or 18.1%, from Adjusted EBITDA of $55.1 million in the prior year period. The decrease was driven by lower volume/mix, cost inflation and unfavorable fixed cost absorption, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 7.9%, a 20-basis point decrease from the prior year period.
International
Our net sales in the International reportable segment for the nine months ended March 31, 2026 were $517.1 million, an increase of $3.5 million, or 0.7%, including a favorable impact of $27.9 million or 5.4% related to foreign exchange, as compared to the prior year period. Organic net sales decreased $23.6 million, or 4.6%, to $486.1 million from $509.7 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 lower sales in the baby & kids category. The decrease in organic net sales was due to lower sales in all categories, especially in the baby & kids and meal preparation categories. The decrease in the baby & kids category was primarily driven by continued industry-wide volume softness in purees in the U.K. The decrease in the meal preparation category was due to weak soup performance across brands and softness in meat alternatives and private label spreads and drizzles.
Adjusted EBITDA for the nine months ended March 31, 2026 was $51.1 million, a decrease of $13.9 million, or 21.4%, from Adjusted EBITDA of $65.1 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 9.9%, a 280-basis point decrease from the prior year period.
Corporate and Other
Corporate and Other expenses remained relatively flat compared to the prior year period.
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 March 31, 2026, we had $549,825 of debt obligations maturing on December 22, 2026, consisting of $401,000 of loans outstanding under the Revolver and $148,825 of Term Loans (each as defined in Note 10, Debt and Borrowings). As of March 31, 2026, we had cash of $44,311 and available liquidity of $195,901, 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 February 27, 2026, we completed the sale of our North American Snacks Business and received $111.2 million in cash. The net proceeds of $101.1 million were used to repay a portion of the Term Loans.
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The Company and the Board of Directors remain focused on executing the next phases of 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 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 while we evaluate potential 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 March 31, 2026, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 4.31:1.00, 4.31:1.00 and 2.30:1.00, 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 March 31, 2026 was 7.74%. The Company uses interest rate swaps to hedge a portion of the interest rate risk related to its outstanding variable rate debt. As of March 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 March 31, 2026 was 7.41%. Additionally, the Credit Agreement contains a commitment fee of 0.25% per annum on the amount unused under the Credit Agreement.
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Cash and Cash Equivalents
Our cash and cash equivalents balance decreased by $10.0 million at March 31, 2026 to $44.3 million as compared to $54.4 million at June 30, 2025. Our working capital was negative $399.0 million at March 31, 2026, a decrease of $652.0 million from $252.9 million at the end of fiscal 2025. The decrease was driven by the classification of $549.8 million of debt obligations, maturing on December 22, 2026, as current. Additionally, our total debt balance, net of unamortized issuance costs, at March 31, 2026 has decreased by $155.1 million to $549.1 million as compared to $704.2 million at June 30, 2025 as a result of net repayments carried out during the period.
Our cash balances are held in the U.S., U.K., Canada, Western Europe, the Middle East and India. As of March 31, 2026, substantially all cash was held outside the U.S. and there are no material restrictions on repatriation.
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.
Cash Provided by (Used in) Operating, Investing and Financing Activities
Nine Months Ended March 31, Change in
(Dollars in thousands) 2026 2025 Dollars
Cash flows provided by (used in):
Operating activities $ 66,826 $ 24,763 $ 42,063
Investing activities 86,766 (354 ) 87,120
Financing activities (159,210 ) (36,475 ) (122,735 )
Effect of exchange rate changes on cash (4,426 ) 2,184 (6,610 )
Net decrease in cash and cash equivalents $ (10,044 ) $ (9,882 ) $ (162 )
Cash provided by operating activities was $66.8 million for the nine months ended March 31, 2026, an increase of $42.1 million from cash provided by operating activities of $24.8 million in the prior year period. This increase in cash provided by operating activities versus the prior year period resulted primarily from working capital changes versus the prior year period, reflecting higher cash generation primarily due to focused inventory management, which generated year-over-year improvement of $70.2 million and an increase in accounts receivable collection of $19.0 million, partially offset by a reduced benefit from accounts payable and accrued expenses in the amount of $9.6 million. The changes in other current assets and accounts payable and accrued expenses for the nine months ended March 31, 2026 reflected the recognition of a $35.0 million insurance receivable and corresponding settlement liability (see Note 17. Commitments and Contingencies).
Cash provided by investing activities was $86.8 million for the nine months ended March 31, 2026, an increase of $87.1 million from cash used in investing activities of $0.4 million in the prior year period. The increase in cash provided by investing activities was primarily due to the receipt of proceeds from the 2026 sale of the Company’s North American Snacks Business.
Cash used in financing activities was $159.2 million for the nine months ended March 31, 2026, an increase of $122.7 million compared to $36.5 million of cash used in financing activities in the prior year period. The increase in cash used in financing activities was primarily due to higher net debt repayments during the nine months ended March 31, 2026, including the use of $101.1 million of Transaction proceeds being used to repay a portion of the Term Loan and $19.5 million of incremental repayments of borrowings under the Revolver.
Free Cash Flow
Our free cash flow was $50.8 million for the nine months ended March 31, 2026, an increase of $45.1 million from free cash flow of $5.7 million in the nine months ended March 31, 2025. The period-over-period change resulted primarily from an increase in cash flows from operations of $42.1 million driven by the reasons explained 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 from our net cash provided by operating activities to free cash flow.
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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 nine months ended March 31, 2025, the Company did not repurchase any shares under the repurchase program. As of March 31, 2026, 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, held for sale businesses, discontinued brands, 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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A reconciliation between reported net sales and organic net sales is as follows:
(Dollars in thousands) North America International Hain Consolidated
Net sales - Three months ended March 31, 2026 $ 171,495 $ 166,862 $ 338,357
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories 57,493 872 58,365
Less: Impact of foreign currency exchange 282 12,244 12,526
Organic net sales - Three months ended March 31, 2026 $ 113,720 $ 153,746 $ 267,466
Net sales - Three months ended March 31, 2025 $ 222,407 $ 167,944 $ 390,351
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories 105,487 1,155 106,642
Organic net sales - Three months ended March 31, 2025 $ 116,920 $ 166,789 $ 283,709
Net sales decline (22.9 )% (0.6 )% (13.3 )%
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories (20.3 )% (0.1 )% (10.8 )%
Less: Impact of foreign currency exchange 0.1 % 7.3 % 3.2 %
Organic net sales decline (2.7 )% (7.8 )% (5.7 )%
Net sales - Nine months ended March 31, 2026 $ 573,236 $ 517,124 $ 1,090,360
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories 226,664 3,085 229,749
Less: Impact of foreign currency exchange 267 27,906 28,173
Organic net sales - Nine months ended March 31, 2026 $ 346,305 $ 486,133 $ 832,438
Net sales - Nine months ended March 31, 2025 $ 682,836 $ 513,596 $ 1,196,432
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories 330,826 3,872 334,698
Organic net sales - Nine months ended March 31, 2025 $ 352,010 $ 509,724 $ 861,734
Net sales (decline) growth (16.1 )% 0.7 % (8.9 )%
Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories (14.5 )% (0.1 )% (7.9 )%
Less: Impact of foreign currency exchange 0.0 % 5.4 % 2.4 %
Organic net sales decline (1.6 )% (4.6 )% (3.4 )%
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, proceeds from insurance claim, certain litigation expenses, net, plant closure related costs, net, warehouse and manufacturing consolidation and other costs, net, productivity and transformation costs, costs associated with acquisitions, divestitures and other transactions, losses (gains) on sales of assets, goodwill impairment, long-lived asset and intangibles impairment 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
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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 March 31, Nine Months Ended March 31,
(Dollars in thousands) 2026 2025 2026 2025
Net loss $ (106,343 ) $ (134,588 ) $ (242,974 ) $ (258,226 )
Depreciation and amortization 12,484 10,455 39,044 32,902
Equity in net loss of equity-method investees 21 966 327 1,709
Interest expense, net 12,515 11,096 39,723 36,084
Provision (benefit) for income taxes 759 (505 ) 1,889 5,746
Stock-based compensation, net 1,138 2,973 4,192 9,422
Unrealized currency losses 219 1,137 623 707
Certain litigation expenses, net(a) 2,519 407 3,164 2,254
Proceeds from insurance claim(b) — — (25,900 ) —
Restructuring activities
Productivity and transformation costs 4,066 7,289 17,519 16,497
Plant closure related costs, net 727 (5 ) 1533 1229
Warehouse/manufacturing consolidation and other costs, net — 384 — 384
Acquisitions, divestitures and other
Loss (gain) on sale of assets 50,529 (106 ) 48,501 2,202
Transaction and integration costs, net 1,553 (151 ) 4,735 (574 )
Impairment charges
Goodwill impairment 31,018 110,251 150,926 201,518
Long-lived asset and intangibles impairment 15,047 24,012 26,964 42,029
Adjusted EBITDA $ 26,252 $ 33,615 $ 70,266 $ 93,883
(a) Expenses and items relating to securities class action and baby food litigation and SEC investigation.
(b) Represents a receivable under the Company’s R&W insurance related to one of our prior acquisitions, which was collected on January 2, 2026.
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:
Nine Months Ended March 31,
(Dollars in thousands) 2026 2025
Net cash provided by operating activities $ 66,826 $ 24,763
Purchases of property, plant and equipment (16,004 ) (19,060 )
Free Cash Flow $ 50,822 $ 5,703
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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, except as noted herein.
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 March 31, 2026, 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 the North America and International reportable segments was less than its respective carrying amount, including goodwill. As a result of a decline in the projected performance and expected future cash flows, the Company completed interim quantitative impairment tests of goodwill for all of its international reporting units: U.K., Western Europe and Ella’s Kitchen UK. For the U.S. reporting unit, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill, and concluded that the U.S. reporting unit’s estimated fair value exceeded its carrying amount.
In performing the quantitative tests for the U.K., Western Europe and Ella’s Kitchen UK reporting units, the fair values were estimated using a blended approach of the Discounted Cash Flow (“DCF”) method income approach and the Guideline Public Company Methodology (“GPCM”) market approach. As of March 31, 2026, the U.K. reporting unit’s carrying amount exceeded its estimated fair value of $227,121, resulting in the recognition of a non-cash impairment charge of $31,018 to reduce the carrying value of the U.K. reporting unit goodwill to nil. The U.K. reporting unit’s impairment charges reflected a decline in sales volume and further compression in Adjusted EBITDA that the Company continued to experience. Aggregate goodwill impairment charges associated with the U.K. and U.S. reporting units were $112,431 and $38,495, respectively for the nine months ended March 31, 2026.
As of March 31, 2026, the estimated fair values of the Western Europe, and Ella’s Kitchen UK reporting units exceeded their carrying amounts by 9.4% and 117.8%, respectively. The discount rate in the quantitative tests for the Western Europe and Ella’s Kitchen UK reporting units 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 Western Europe reporting unit remains at risk of potential impairment if the fair values 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.
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As of March 31, 2026, 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 third quarter of 2026, we qualitatively assessed our indefinite-lived intangible assets for impairment and determined that the Earth’s Best® Organic and soup indefinite-lived tradenames (Cully & Sully®, Yorkshire Provender®, New Covent Garden® soups) 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 Earth’s Best® Organic indefinite-lived tradenames.
During the three months ended March 31, 2026, as a result of a continued decline in actual and projected net sales driven by challenges related to regaining Earth’s Best® formula distribution, the Company conducted an interim quantitative impairment test for its Earth’s Best® Organic indefinite-lived tradename. The Company concluded that the indefinite-lived intangible asset carrying amount exceeded its estimated fair value and recorded a non-cash impairment charge of $2,038 during the three months ended March 31, 2026, which was recorded within long-lived asset and intangibles impairment on the consolidated statement of operations. The Earth’s Best® indefinite-lived tradename is part of the North America reportable segment and had a remaining carrying value of $20,000 as of March 31, 2026.
During the three months ended March 31, 2026, as a result of a decline in projected net sales driven by shifting consumer behavior towards private label soup, the Company conducted an interim quantitative impairment test for its soup indefinite-lived tradenames (Cully & Sully®, Yorkshire Provender®, and New Covent Garden® soups). The Company concluded that the estimated fair value exceeded the carrying amount by 8.0%. The soup indefinite-lived intangible assets are part of the International reportable segment and had a remaining aggregate carrying value of $23,229 as of March 31, 2026.
During the nine months ended March 31, 2026, the Company conducted an interim quantitative impairment test for its Ella’s Kitchen® baby and kids foods and Hartley’s® jelly tradenames and recorded a non-cash impairment charge of $11,917 for Hartley’s® jelly indefinite-lived tradename. The estimated fair value of the Ella’s Kitchen® tradename exceeded its carrying amount by 12.8%. These tradenames were subsequently reclassified to definite-lived and ascribed a useful life of 10 years. Such tradenames are part of the International reportable segment and have remaining carrying values of $34,246 and $37,336, respectively, as of March 31, 2026.
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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.