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What changed in HAIN CELESTIAL GROUP INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HAIN CELESTIAL GROUP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−316 removedSource: 10-K (2023-08-24) vs 10-K (2022-08-25)

Top changes in HAIN CELESTIAL GROUP INC's 2023 10-K

270 paragraphs added · 316 removed · 192 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+6 added−32 removed33 unchanged
Biggest changeOur North America reportable segment operates the following manufacturing facilities: • Boulder, Colorado, which produces Celestial Seasonings ® teas; • Mountville, Pennsylvania, which produces Sensible Portions ® and Terra ® snack products; • Bell, California, which produces Alba Botanica ® , Avalon Organics ® , and JASON ® personal care products; • Lancaster, Pennsylvania, which produces snack products ; • York, Pennsylvania, which produces ParmCrisps ® ; • Trenton, Ontario, which produces Yves Veggie Cuisine ® plant-based products; • Vancouver, British Columbia, which produces Yves Veggie Cuisine ® plant-based products; and • Mississauga, Ontario, which produces our Live Clean ® and other personal care products. 9 Table of Contents Our International reportable segment operates the following manufacturing facilities: • Histon, England, which produces our ambient grocery products inc luding Hartley’s ® , Frank Cooper’s ® , Robertson’s ® and Clarks™; • Grimsby, England, which produces our New Covent Garden Soup Co. ® and Yorkshire Provender ® chilled soups; • Clitheroe, England, which produces our private label and Farmhouse Fare TM hot-eating desserts; • Fakenham, England, which produces Linda McCartney’s ® (under license) meat-free frozen a nd chilled foods; • Troisdorf, Germany, which produces Natumi ® , Lima ® , Joya ® and other plant-based beverages and private label products; • Oberwart, Austria, which produces our Lima ® and Joya ® plant-based foods and beverages, creamers, cooking creams and private label products; and • Schwerin, Germany, which also produces our Lima ® and Joya ® plant-based foods and beverages and private label products.
Biggest changeOur International reportable segment operates the following manufacturing facilities: • Histon, England, which produces our ambient grocery products including Hartley’s ® , Frank Cooper’s ® , Robertson’s ® and Clarks™; • Grimsby, England, which produces our New Covent Garden Soup Co. ® and Yorkshire Provender ® chilled soups; • Clitheroe, England, which produces our private label and Farmhouse Fare TM hot-eating desserts; • Fakenham, England, which produces Linda McCartney’s ® (under license) meat-free frozen and chilled dishes and meals; • Troisdorf, Germany, which produces Natumi ® , Lima ® , Joya ® and other plant-based beverages and private label products; • Oberwart, Austria, which produces our Lima ® and Joya ® plant-based foods and beverages, creamers, cooking creams and private label products; and • Schwerin, Germany, which also produces our Lima ® and Joya ® plant-based foods and beverages and private label products.
Our customer base consists principally of specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores. Our products are sold through a combination of direct salespeople, brokers and distributors.
Our customer base consists principally of specialty and natural food distributors, supermarkets and natural food stores, mass-market, club stores, e-commerce retailers, drug and convenience stores, and food service channels. Our products are sold through a combination of direct salespeople, brokers and distributors.
In the United States, each of our own food manufacturing facilities has a Food Safety Plan (“FSP”), which focuses on preventing food safety risks and is compliant with the requirements set forth under the Food Safety and Modernization Act (“FSMA”).
In the United States, each of our own food manufacturing facilities has a Food Safety Plan (“FSP”), which focuses on preventing food safety risks and is compliant with the requirements set forth under the Food Safety Modernization Act (“FSMA”).
We also sell our Hartley’s ® jams, fruit spreads and jellies, Terra ® varieties of root vegetable and potato chips, Celestial Seasonings ® teas, Linda McCartney’s ® (under license) chilled and frozen plant-based meals, Cully & Sully ® chilled soups and ready meals, and private label products in Europe.
We also sell our Hartley’s ® jams, fruit spreads and jellies, Terra ® varieties of root vegetable and potato chips, Celestial Seasonings ® teas, Linda McCartney’s ® (under license) chilled and frozen plant-based dishes and meals, Cully & Sully ® chilled soups and ready meals, and private label products in Europe.
Our customer base consists principally of grocery supermarkets, mass merchandisers, club stores, natural food distributors, personal care distributors, drug store chains and food service distributors. Our products are sold through our own retail direct sales force. We also utilize third-party brokers who receive commissions and sell to food service and retail customers.
Canada Our products are sold throughout Canada. Our customer base consists principally of grocery supermarkets, club stores, mass merchandisers, natural food distributors, drug store chains, personal care distributors, and food service distributors. Our products are sold through our own retail direct sales force. We also utilize third-party brokers who receive commissions and sell to food service and retail customers.
The Company’s food and beverage brands include Celestial Seasonings ® , Clarks ™ , Cully & Sully ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , Garden of Eatin’ ® , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney’s ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co. ® , ParmCrisps ® , Robertson’s ® , Rose’s ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terr a ® , The Greek Gods ® , Thinsters ® , Yorkshire Provender ® and Yves Veggie Cuisine ® .
The Company’s food and beverage brands include Celestial Seasonings ® , Clarks™, Cully & Sully ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , Garden of Eatin’ ® , Garden Veggie ™ , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney’s ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co. ® , ParmCrisps ® , Robertson’s ® , Rose’s ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Greek Gods ® , Thinsters ® , Yorkshire Provender ® and Yves Veggie Cuisine ® .
Independent Certifications 11 Table of Contents Substantially all of our Hain-owned manufacturing sites and a significant number of our contract manufacturers are certified against a recognized standard such as the Global Food Safety Initiative (“GFSI”), which includes Safe Quality Foods (“SQF”) and British Retail Consortium (“BRC”), or ISO 9001 Quality Management Systems and ISO 22716 GMP Cosmetic and Personal Care.
Independent Certifications Substantially all of our Hain-owned manufacturing sites and a significant number of our contract manufacturers are certified against a recognized standard such as the Global Food Safety Initiative (“GFSI”), which includes Safe Quality Foods (“SQF”) and British Retail Consortium (“BRC”), or ISO 9001 Quality Management Systems and ISO 22716 GMP Cosmetic and Personal Care.
In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting “E-mail Alerts” under the "IR Resources" section of our investor relations website. Information on the Company’s website is not incorporated by reference herein and is not a part of this Form 10-K.
In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting “E-mail Alerts” under the "IR Resources" section of our investor relations website. Information on the Company’s website is not incorporated by reference herein and is not a part of this Form 10-K. 11 Table of Contents
We promote fairness by practicing equal opportunity in all decisions about hiring, compensation, training, promotions and every other aspect of employment. We maintain a Diversity & Inclusion (“D&I”) Council in North America to create and foster a workplace that reflects and contributes to the diverse, global communities in which we do business.
We promote fairness by practicing equal opportunity in all decisions about hiring, compensation, training, promotions and every other aspect of employment. 4 Table of Contents We maintain a Diversity & Inclusion (“D&I”) Council in North America to create and foster a workplace that reflects and contributes to the diverse, global communities in which we do business.
We believe that our direct salespeople combined with brokers and distributors provide an effective means of reaching a broad and diverse customer base. Brokers act as agents for us within designated territories and receive commissions. A portion of our direct sales force is organized into dedicated teams to serve our significant customers.
We believe that our direct salespeople com bined with brokers and distributors provide an effective means of reaching a broad and diverse customer base. Brokers act as agents for us within designated territories and receive commissions. A portion of our direct sales force is organized into dedicated teams to serve our significant customers.
See “Item 2: Properties” of this Form 10-K for more information on the manufacturing facilities that we operate. Contract Manufacturers In addition to the products manufactured in our own facilities, independent third-party contract manufacturers, who are referred to in our industry as co-manufacturers or co-packers, manufacture many of our products.
See “Item 2: Properties” of this Form 10-K for more information on the manufacturing facilities that we operate. 8 Table of Contents Contract Manufacturers In addition to the products manufactured in our own facilities, independent third-party contract manufacturers, who are referred to in our industry as co-manufacturers or co-packers, manufacture many of our products.
The information available at hain.com/impact is no t a part of this Form 10-K or incorporated into any of our other filings made with the SEC. Employee Health and Safety Employee safety is always front and center. We invest in the health, safety, development and well-being of our employees.
The information available at hain.com/impact is not a part of this Form 10-K or incorporated into any of our other filings made with the SEC. Employee Health and Safety Employee safety is always front and center. We invest in the health, safety, development and well-being of our employees.
During fiscal 2022, 2021 and 2020, approximately 49%, 39% and 41%, respec tively, of our sales were derived from products manufactured by co-packers. We require that our co-packers comply with all applicable regulations and our quality and food safety program requirements, and compliance is verified through auditing and other activities.
During fiscal 2023, 2022 and 2021, approximately 42%, 49% and 39%, respec tively, of our sales were derived from products manufactured by co-packers. We require that our co-packers comply with all applicable regulations and our quality and food safety program requirements, and compliance is verified through auditing and other activities.
We have additional regional programs and policies in place to 5 Table of Contents encourage open communications with management and Human Resources about employees’ ideas, concerns and how they are doing. Products Our brand portfolio focuses on growing global brands in categories where we believe we have the most potential.
We have additional regional programs and policies in place to encourage open communications with management and Human Resources about employees’ ideas, concerns and how they are doing. Products Our brand portfolio focuses on growing global brands in categories where we believe we have the most potential.
The brands sold in our Canada operating segment include Yves Veggie Cuisine ® refrigerated and frozen meat-alternative products, vegetables and lentils, Earth’s Best ® infant formula, MaraNatha ® nut butters, Spectrum ® cooking and culinary oils, Imagine ® aseptic soups, The Greek Gods ® Greek-style yogurt and Robertson’s ® marmalades.
The brands sold in Canada include Yves Veggie Cuisine ® refrigerated and frozen meat-alternative snacks and meals, vegetables and lentils, Earth’s Best ® infant formula, MaraNatha ® nut butters, Spectrum ® cooking and culinary oils, Imagine ® aseptic soups, The Greek Gods ® Greek-style yogurt and Robertson’s ® marmalades.
Customers Walmart Inc. and its affiliates together accounted for approximately 15%, 11% and 12% of our consolidated sales for the fiscal years ended June 30, 2022, 2021 and 2020, respectively, which were primarily related to the United States, Canada and United Kingdom operating segments.
Customers Walmart Inc. and its affiliates together accounted for approximately 16%, 15% and 11% of our consolidated sales for the fiscal years ended June 30, 2023, 2022 and 2021, respectively, which were primarily related to the United States, Canada and United Kingdom.
Production Manufacturing During fiscal 2022, 2021 and 2020, approximately 51% , 61% and 59%, respectively, of our revenue was derived from products manufactured at our own facilities.
Production Manufacturing During fiscal 2023, 2022 and 2021, approximately 58% , 51% and 61%, respectively, of our revenue was derived from products manufactured at our own facilities.
We are continuing to work to build our D&I efforts into recruitment, retention and internal mobility. As of June 30, 2022, our global wor kforce was 59% male and 41% female.
We are continuing to work to build our D&I efforts into recruitment, retention and internal mobility. As of June 30, 2023, our global workforce was 59% male and 41% female.
In the United States, on an employee self-reported basis, the racial/ethnic composition of our workforce was approximately 42% Hispanic or Latino, 38% White, 12% Black or African American, 5% Asian and 3% other. We make additional workforce demographic data available at hain.com/impact .
In the United States, on an employee self-reported basis, the racial/ethnic composition of our workforce was approximately 40% Hispanic or Latino, 42% White, 10% Black or African American, 6% Asian and 2% other. We make additional workforce demographic data available at hain.com/impact .
Our Joya ® brand includes soy, oat, rice and nut-based drinks as well as plant-based yogurts, desserts, creamers and tofu.
Our Natumi ® brand includes plant-based beverages, including rice, soy, oat and spelt. Our Joya ® brand includes soy, oat, rice and nut-based drinks as well as plant-based yogurts, desserts, creamers and tofu.
Large conventional personal care products companies with whom we compete include, but are not limited to, The Clorox Company, Colgate-Palmolive Company, Johnson & Johnson, The Procter & Gamble Company, S. C. Johnson & Son, Inc. and Unilever PLC.
Smucker Company, Kellogg Company, Mondelez International, Inc., Nestle S.A., PepsiCo, Inc. and Unilever PLC. Large conventional personal care products companies with whom we compete include, but are not limited to, The Clorox Company, Colgate-Palmolive Company, Johnson & Johnson, The Procter & Gamble Company, S. C. Johnson & Son, Inc. and Unilever PLC.
Our ESG Reports and the other information available at hain.com/company/impact are not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any of our other filings made with the Securities and Exchange Commission (the “SEC”).
More details about our Impact strategy and goals, including our most recent ESG Report, are available at hain.com/company/impact. Our ESG Reports and the other information available at hain.com/company/impact are not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any of our other filings made with the Securities and Exchange Commission (the “SEC”).
Under FSMA, each of our contract manufacturers is required to have a FSP, a Hazard Analysis Critical Control Plant (“HACCP”) plan or a hazard analysis critical control points plan that identifies critical pathways for contaminants and mandates control measures that must be used to prevent, eliminate or reduce relevant food-borne hazards.
Under FSMA, each of our contract manufacturers is required to have a FSP, a Hazard Analysis Critical Control Plant (“HACCP”) plan or a hazard analysis critical control points plan that identifies critical pathways for contaminants and mandates control measures to be in place to mitigate food-borne hazards.
The products sold by our United Kingdom operating segment include New Covent Garden Soup Co. ® and Yorkshire Provender ® chilled soups, private label and Farmhouse Fare ™ hot-eating desserts, Linda McCartney’s ® (under license) chilled and frozen plant-based meals, Hartley’s ® jams, fruit spreads and jellies, Sun-Pat ® nut butters, Clarks™ natural sweeteners and Robertson’s ® , Frank Cooper’s ® and Rose’s ® (under license) marmalades.
The products sold in the United Kingdom include Ella's Kitchen ® premium organic infant and toddler foods, New Covent Garden Soup Co. ® and Yorkshire Provender ® chilled soups, private label and Farmhouse Fare ™ hot-eating desserts, Linda McCartney’s ® (under license) chilled and frozen plant-based dishes and meals, Hartley’s ® jams, fruit spreads and jellies, Sun-Pat ® nut butters, Clarks™ natural sweeteners and Robertson’s ® , Frank Cooper’s ® and Rose’s ® (under license) marmalades.
A team of professional product developers, including microbiologists, nutritionists, food scientists, chefs and chemists, work to develop products to meet changing consumer needs. Our research and development staff incorporates product ideas from all areas of our business in order to formulate new products.
We have a demonstrated track record of extending our product offerings into other product categories. A team of professional product developers, including microbiologists, nutritionists, food scientists, chefs and chemists, work to develop products to meet changing consumer needs. Our research and development staff incorporates product ideas from all areas of our business in order to formulate new products.
Hot tea, hot-eating desserts and soup sales are stronger in colder months, while sales of snack foods, sunscreen and certain of our personal care products are stronger in the warmer months.
Seasonality Certain of our product lines have seasonal fluctuations in demand. Hot tea, hot-eating desserts and soup sales are stronger in colder months, while sales of snack foods, sunscreen and certain of our personal care products are stronger in the warmer months.
We continuously evaluate our existing products for quality, taste, nutritional value and cost and make improvements where possible. Conversely, we discontinue products or stock keeping units (“SKUs”) when sales of those items do not warrant further production.
We continuously evaluate our existing products for quality, taste, nutritional value and cost and make improvements where possible. Conversely, we discontinue products or stock keeping units (“SKUs”) when sales of those items do not warrant further production. Products under different brands for our reportable segments are noted in the segments section.
Substantially all of our employees are full-time, permanent employees. 4 Table of Contents Our employees are critical to our success. The following programs, initiatives and principles encompass some of the human capital objectives and measures that we focus on in managing our business and in seeking to attract and retain a talented workforce.
Substantially all of our employees are full-time, permanent employees. Our employees are critical to our success. The following programs, initiatives and principles encompass some of the human capital objectives and measures that we focus on in managing our business and in seeking to attract and retain a talented workforce. Diversity and Inclusion People have always been our greatest asset.
We also provide a comprehensive range of private label products to many retailers, convenience stores and food service providers in the following categories: fresh soup, chilled desserts, meat-free meals and ambient grocery products. Our products are principally sold throughout the United Kingdom and Ireland, but are also sold in other parts of the world.
We also provide a comprehensive range of private label products to many grocery and organic food retailers, convenience stores and food service providers in the following categories: fresh soup, chilled desserts, meat-free dishes and meals and ambient grocery products.
The Lima ® brand includes a wide range of organic products such as soy sauce, plant-based beverages and grain cakes, as well as grains, pasta, cereals, miso, snacks, sweeteners, spreads, soups and condiments. Our Natumi ® brand includes plant-based beverages, including rice, soy, oat and spelt.
Europe Our products sold by the Europe reporting unit include, among others, products sold under the Joya ® , Lima ® and Natumi ® brands. The Lima ® brand includes a wide range of organic products such as soy sauce, plant-based beverages and grain cakes, as well as grains, pasta, cereals, miso, snacks, sweeteners, spreads, soups and condiments.
Human Capital Resources As of June 30, 2022, we had appro ximately 3,078 employees, with approximately 49% located in North America and approximately 51% located outside of North America. Approximately 65% of our employees in North America and approximately 60% of our employees outside of North America were based in our production facilities.
Human Capital Resources As of June 30, 2023, we had approximately 2,837 employees, with approximately 46% located in North America and approximately 54% located outside of North America. Approximately 59% of our employees in North America and approximately 60% of our employees outside of North America were based in our production facilities.
In addition, each such facility has at least one Preventive Controls Qualified Individual (“PCQI”) who has successfully completed training in the development and application of risk-based preventive controls at least equivalent to that received under a standardized curriculum recognized by the FDA.
In addition, each such facility has at least one Preventive Controls Qualified Individual (“PCQI”) who has successfully completed training equivalent to that received under a standardized curriculum recognized by the FDA. We conduct audits of our contract manufacturers to address topics such as allergen control; ingredient, packaging and product specifications; and sanitation.
Trade advertising and promotion includes placement fees, cooperative advertising, feature advertising in distribution catalogs and in-store merchandising in prominent and secondary locations. Consumer advertising and promotion is used to build brand awareness and equity, drive trial to bring in new consumers and increase consumption. Paid social and digital advertising and public relations programs are the main drivers of brand awareness.
Consumer advertising and promotion is used to build brand awareness and equity, drive trial to bring in new consumers and retain existing users to increase household penetration and consumption. Paid social and digital advertising, including retailer media and public relations programs, are the main drivers of brand awareness.
International Segment: United Kingdom In the United Kingdom, our products include soups, plant-based and meat-free products, as well as ambient products such as jams, fruit spreads, jellies, honey, marmalades, nut butters, sweeteners, syrups and dessert sauces.
Our personal care products include skin, hair and oral care products, sun care products and deodorants under the Alba Botanica ® , Avalon Organics ® , JASON ® , and Live Clean ® brands. 6 Table of Contents International Segment: United Kingdom In the United Kingdom, our products include soups, plant-based and meat-free dishes and meals, as well as ambient products such as jams, fruit spreads, jellies, honey, marmalades, nut butters, sweeteners, syrups and dessert sauces.
Competitive factors in the packaged foods industry include product quality and taste, brand awareness and loyalty, product variety, interesting or unique product names, product packaging and package design, shelf space, reputation, price, advertising, promotion and nutritional claims.
Competitive factors in the packaged foods industry include product quality and taste, brand awareness and loyalty, product variety, interesting or unique product names, product packaging and package design, shelf space, reputation, price, advertising, promotion and nutritional claims. 9 Table of Contents Trademarks We believe that brand awareness is a significant component in a consumer’s decision to purchase one product over another in the highly competitive consumer packaged goods industry.
We continuously seek to understand our consumers and develop products that address their desire for organic, natural and better-for-you alternatives to conventional packaged foods and personal care products. We have a demonstrated track record of extending our product offerings into other product categories.
New Product Initiatives Through Research and Development Innovation, including new product development, is a key component of our growth strategy. We continuously seek to understand our consumers and develop products that address their desire for organic, natural and better-for-you alternatives to conventional packaged foods and personal care products.
In the United States, our organic products are certified in accordance with the USDA’s National Organic Program through Quality Assurance International (“QAI”), a third-party certifying agency. For products marketed as organic outside of the United States, we use accredited certifying agencies to ensure compliance with country-specific government regulations for selling organic products or reciprocity, where available.
In the United States, our organic products are certified in accordance with the USDA’s National Organic Program through Quality Assurance International (“QAI”), a third-party certifying agency.
No other customer accounted for at least 10% of our net sales in any of the past three fiscal years. 8 Table of Contents Foreign Operations We sell our products to customers in more tha n 75 co untries.
No other customer accounted for at least 10% of our net sales in any of the past three fiscal years. Foreign Operations We sell our products to customers worldwide. Sales outside of the United States represented approximately 43%, 45% and 52% of our consolidated net sales in fiscal 2023, 2022 and 2021, respectively.
Item 1. Business Overview The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993 and is headquartered in Lake Success, New York. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet.
Item 1. Business Overview The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993. The Company is a leading manufacturer, marketer and seller of better-for-you brands that inspire healthier living.
Trial and conversion tactics include, but are not limited to, product search on Google and e-commerce sites, digital coupons, product sampling, direct mail and e-consumer relationship programs. Additionally, brand specific websites and social media pages are used to engage consumers with lifestyle, product and usage information related to specific brands. We also utilize partnerships to help create awareness and advocacy.
Trial and conversion tactics include, but are not limited to, product search on Google and e-commerce sites, digital coupons, product sampling, direct mail and e-consumer relationship programs.
Also, our Earth’s Best ® brand has an agreement with PBS Kids and Sesame Workshop in the United States, leveraging popular characters for on and off packaging communications. New Product Initiatives Through Research and Development Innovation, including new product development, is a key component of our growth strategy.
For example, our Earth’s Best ® brand has an agreement with PBS Kids and Sesame Workshop in the United States, leveraging popular characters for on and off packaging communications. We also leverage various influencers to help increase brand reach and relevance.
We attempt to mitigate the input price volatility by negotiating and entering into purchase arrangements with our suppliers and by adjusting the sale price of our products. Competition We operate in a highly competitive environment. Our products compete with both large conventional packaged goods companies and natural and organic packaged foods companies. Many of these competitors enjoy significantly greater resources.
Agricultural commodities and ingredients are subject to price volatility which can be caused by a variety of factors. We attempt to mitigate the input price volatility by negotiating and entering into purchase arrangements with our suppliers and by adjusting the sale price of our products. Competition We operate in a highly competitive environment.
A significant portion of the products marketed by us are sold through independent distributors. Food distributors purchase products from us for resale to retailers. The brands sold by the United States operating segment include: Turbocharge The Turbocharge brands are leading-share brands in what we believe to be very high-growth categories and they include snacks.
A significant portion of the products marketed by us are sold through independent distributors. Food distributors purchase products from us for resale to retailers.
Large conventional packaged foods competitors include Campbell Soup Company, Conagra Brands, Inc., Danone S.A., General Mills, Inc., The Hershey Company, The J.M. Smucker Company, Kellogg Company, Mondelez International, Inc., Nestle S.A., 10 Table of Contents PepsiCo, Inc. and Unilever PLC.
Our products compete with both large conventional packaged goods companies and natural and organic packaged foods companies. Many of these competitors enjoy significantly greater resources. Large conventional packaged foods competitors include Campbell Soup Company, Conagra Brands, Inc., Danone S.A., General Mills, Inc., The Hershey Company, The J.M.
Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores in over 75 countries worldwide. The Company manufactures, markets, distributes and sells organic and natural products providing consumers with the opportunity to lead A Healthier Way of Life ® .
The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores worldwide.
This structure is in line with how our Chief Operating Decision Maker assesses our performance and allocates resources. We use segment net sales and operating income to evaluate performance and to allocate resources. We believe these measures are most relevant in order to analyze segment results and trends.
This structure is in line with how our Chief Operating Decision Maker (“CODM”) assesses our performance and allocates resources.
Our customer base consists principally of retailers, convenience stores, food service providers, business to business, natural food and ethnic specialty distributors, club stores and wholesalers. Ella’s Kitchen UK Ella's Kitchen UK is a manufacturer and distributor of premium organic infant and toddler foods under the Ella's Kitchen ® brand.
Our products are principally sold throughout the United Kingdom and Ireland but are also sold in Europe and other parts of the world. Our customer base consists principally of retailers, convenience stores, food service providers, business to business, natural food and ethnic specialty distributors, club stores and wholesalers.
Many of our products are certified kosher under the supervision of accredited agencies including The Union of Orthodox Jewish Congregations and “KOF-K” Kosher Supervision.
For products marketed as organic outside of the United States, we use accredited certifying agencies to ensure compliance with country-specific government regulations for selling organic products or reciprocity, where available. 10 Table of Contents Many of our products are certified kosher under the supervision of accredited agencies including The Union of Orthodox Jewish Congregations and “KOF-K” Kosher Supervision.
Other food brands include Celestial Seasonings ® teas, Terra ® chips and Sensible Portions ® snack products. Our personal care products include skin, hair and oral care products, sun care products and deodorants under the Alba Botanica ® , Avalon Organics ® , JASON ® , and Live Clean ® brands.
Other food brands include Celestial Seasonings ® teas, Terra ® chips and Garden Veggie ™ and Sensible Portions ® snack products.
Sales outside of the United States represented approximately 45%, 52% and 51% of our consolidated net sales in fiscal 2022, 2021 and 2020, respectively. Marketing We aim to meet the consumer at multiple points in their journey, both pre-shop and during purchase, both in-store and online. We use a combination of trade and consumer advertising and promotion.
Marketing We aim to meet the consumer at multiple points in their journey, across the digital and omnichannel ecosystem, communicating both in-store and online. We use a combination of trade and consumer advertising and promotion. Trade advertising and promotion includes placement fees, cooperative advertising, feature advertising in distribution catalogs and in-store merchandising in prominent and secondary locations.
In recent years, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters. Working Capital For information relating to our cash flows from operations and working capital items, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.
In recent years, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters. 5 Table of Contents Segments Our organization structure consists of two geographic based reportable segments: North America and International.
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The Company continues to be a leading marketer, manufacturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes.
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The Company’s personal care brands include Alba Botanica ® , Avalon Organics ® , JASON ® , Live Clean ® and Queen Helene ® . Impact We are a global health and wellness company whose purpose is to inspire healthier living for people, communities, and the planet through better-for-you brands.
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The Company’s personal care brands include Alba Botanica ® , Avalon Organics ® , JASON ® , Live Clean ® , and Queen Helene ® . Acquisition On December 28, 2021, the Company acquired all outstanding stock of Proven Brands, Inc.
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We have focused our Impact strategy around expanding our commitment to environmentally sound business practices, creating and selling better-for-you products, social and commUpunity impact initiatives and sustainable manufacturing processes. Our Impact strategy also consists of our environmental, social, and governance (“ESG”) goals along with a commitment to considering long-term social and environmental impacts.
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(and its subsidiary That's How We Roll LLC) and KTB Foods Inc., collectively doing business as "That's How We Roll" ("THWR"), the producer and marketer of ParmCrisps ® and Thinsters ® . See Note 4, Acquisitions and Dispositions, for details.
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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and Note 19, Segment Information , in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details. North America Segment: United States Our products are sol d throughout the United States.
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Discontinued Operations The Company completed the sale of the former Tilda operating segment and the Hain Pure Protein reportable segment; these dispositions represented strategic shifts that had a major impact on the Company’s operations and financial results.
Added
The brands sold in the United States include: • Garden Veggie ™ and Sensible Portions ® snack products including Garden Veggie Straws ® , Garden Veggie Chips and Apple Straws ® , Terra ® varieties of root vegetable chips, potato chips, and other exotic vegetable chips, Garden of Eatin’ ® tortilla chips, and ParmCrisps ® . • Tea products under the Celestial Seasonings ® brand and include more than 100 varieties of herbal, green, black, wellness, rooibos and chai teas, with well-known names and products such as Sleepytime ® , Lemon Zinger ® , Red Zinger ® , Cinnamon Apple Spice, Bengal Spice ® , Country Peach Passion ® and Tea Well ® . • Baby food products include infant and toddler formula, infant cereals, jarred baby food, baby food pouches, snacks and frozen toddler and kids’ foods under the Earth’s Best ® and Earth’s Best Sesame Street (under license) brands. • Yogurt products include The Greek Gods ® Greek-style yogurt products. • Personal care products include hand, skin, hair and oral care products, sun care products and deodorants under the Alba Botanica ® , Avalon Organics ® , JASON ® and Queen Helene ® brands. • Other products include Spectrum ® culinary oils, vinegars and condiments, Spectrum Essentials ® nutritional oils and supplements, MaraNatha ® nut butters, Imagine ® broths, soups and gravies, Hain Pure Foods ® condiments, Health Valley ® cereal bars and soups, and Hollywood ® oils.
Removed
Accordingly, the Company is presenting the operating results and cash flows of the Tilda operating segment and the Hain Pure Protein reportable segment within discontinued operations in the prior periods (see Note 4, Acquisitions and Dispositions, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K ).
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Additionally, brand specific websites and social media pages are used to engage consumers with lifestyle, product and usage information related to specific brands. 7 Table of Contents We also utilize marketing arrangements with third parties to help create awareness and advocacy.
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All footnotes exclude discontinued operations unless otherwise noted. Environmental, Social and Governance We are focused on growing our business sustainably by delivering long-term value for our customers, suppliers, stockholders, employees and the communities where we live and work.
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Our North America reportable segment operates the following manufacturing facilities: • Boulder, Colorado, which produces Celestial Seasonings ® teas; • Mountville, Pennsylvania, which produces Garden Veggie ™ , Sensible Portions ® and Terra ® snack products; • Bell, California, which produces Alba Botanica ® , Avalon Organics ® , and JASON ® personal care products; • Lancaster, Pennsylvania, which produces snack products; • York, Pennsylvania, which produces ParmCrisps ® ; • Vancouver, British Columbia, which produces Yves Veggie Cuisine ® plant-based snacks and meals; and • Mississauga, Ontario, which produces our Live Clean ® and other personal care products.
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As part of our vision to maximize stakeholder value, we are committed to incorporating environmental, social and related governance (“ESG”) principles into our business strategies and organizational culture. The “Healthier Way” framework (Healthier Planet, Products, and People) set out in our most recent ESG Report (available at hain.com/company/impact ) provides our guiding principles for ESG initiatives.
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Our Culture and Our Vision, Mission and Values Our culture is shaped by our vision, mission and values. Our vision is to inspire healthier living for all. To achieve this aspiration, our mission is to build enduring health and wellness brands that are known and loved by consumers and enrich the lives of employees and all of our stakeholders.
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We live by our values of teamwork, integrity and entrepreneurship – we think and act with a broad company perspective, we do the right thing, and we think in an innovative way and challenge the status quo. Diversity and Inclusion People have always been our greatest asset.
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The categories we have identified are called Turbocharge, Targeted Investment, Fuel and Simplify: • The Turbocharge brands are leading-share brands in what we believe to be very high-growth categories. The Turbocharge brands are made up of snacks as well as plant-based meat and non-dairy beverages.
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Our snacks businesses include brands both within the United States and in our International segment (“International”), while our meat and dairy alternatives businesses are concentrated outside the United States. Our snack products include a variety of potato, root vegetable and other exotic vegetable chips, straws, tortilla chips, whole grain chips, pita chips and puffs.
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The Turbocharge brands accounted for approximately 39% of our consolidated net sales in fiscal 2022, 36% in fiscal 2021 and 32% in fiscal 2020. • The Targeted Investment brands are made up of leading-share brands in lower-growth categories.
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To date, we have demonstrated our ability to drive market share and reinvigorate these categories, and we expect that we can continue to do this in the future. The Targeted Investment brands are made up of tea, baby, yogurt, and personal care products.
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The Targeted Investment brands accounted for approximately 35% of our consolidated net sales in fiscal 2022, 34% in fiscal 2021 and 32% in fiscal 2020. • The Fuel brands are stable brands that will be leveraged to fuel investment in the Turbocharge and Targeted Investment categories.
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Fuel brands are made up of premium pantry brands with scale, in categories such as soup, cooking oils and nut butters.
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The Fuel brands accounted for approximately 21% of our consolidated net sales in fiscal 2022, 20% in fiscal 2021 and 19% in fiscal 2020. • The Simplify brands are subscale declining businesses that we believe have limited long-term potential for the Company, and therefore will be managed for profit until they are potentially divested, likely over the course of the next several years.
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Simplify brands accounted for approximately 5% of our consolidated net sales in fiscal 2022, 10% in fiscal 2021 and 17% in fiscal 2020. We refer to the Turbocharge brands and Targeted Investment brands together as our Growth brands. Seasonality Certain of our product lines have seasonal fluctuations in demand.
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Segments Our organization structure consists of two geographic based reportable segments: North America and International. Our North America reportable segment consists of the United States and Canada as operating segments. The International reportable segment is made of three operating segments: United Kingdom, Ella’s Kitchen UK and Europe.
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Segment operating income excludes certain general corporate 6 Table of Contents expenses (which are a component of selling, general and administrative expenses), impairment and acquisition related expenses, restructuring, integration and other charges.
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The following table presents the Company’s net sales by reportable segment for the fiscal years ended June 30, 2022, 2021 and 2020 (amounts in thousands, other than percentages): Fiscal Year Ended June 30, 2022 2021 2020 North America $ 1,163,132 61 % $ 1,104,128 56 % $ 1,171,478 57 % International 728,661 39 % 866,174 44 % 882,425 43 % Total $ 1,891,793 100 % $ 1,970,302 100 % $ 2,053,903 100 % North America Segment: United States Our products are sold throughout the United States.
Removed
Our snack food products include Sensible Portions ® snack products including Garden Veggie Straws ® , Garden Veggie Chips and Apple Straws ® , Terra ® varieties of root vegetable chips, potato chips, and other exotic vegetable chips, Garden of Eatin’ ® tortilla chips, and ParmCrisps ® .
Removed
Targeted Investment The Targeted Investment brands are made up of leading-share brands in lower-growth categories and they include tea, baby food, yogurt, and personal care.
Removed
Our tea products are marketed under the Celestial Seasonings ® brand and include more than 100 varieties of herbal, green, black, wellness, rooibos and chai teas, with well-known names and products such as Sleepytime ® , Lemon Zinger ® , Red Zinger ® , Cinnamon Apple Spice, Bengal Spice ® , Country Peach Passion ® and Tea Well ® .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

56 edited+12 added−17 removed83 unchanged
Biggest changeWe have outsourced certain functions in our North American business to third-party service providers, and any service failures or disruptions related to these outsourcing arrangements could adversely affect our business. We recently completed the process of outsourcing certain functions in our North American business, including order management, billing, accounts receivable and accounts payable, to third-party service providers.
Biggest changeThis could cause our expenses to increase or could limit the amount of products that we can manufacture and sell. We have outsourced certain functions to third-party service providers, and any service failures or disruptions related to these outsourcing arrangements could adversely affect our business.
The credit agreement contains restrictive covenants including, with specified exceptions, limitations on our ability to engage in certain business activities, incur debt and liens, make capital expenditures, pay dividends or make other distributions, enter into affiliate transactions, consolidate, merge or acquire or dispose of assets, and make certain investments, acquisitions and loans.
The credit agreement also contains restrictive covenants including, with specified exceptions, limitations on our ability to engage in certain business activities, incur debt and liens, make capital expenditures, pay dividends or make other distributions, enter into affiliate transactions, consolidate, merge or acquire or dispose of assets, and make certain investments, acquisitions and loans.
Consumer demand could change based on a number of possible factors, including dietary habits and nutritional values, concerns regarding the health and environmental effects of ingredients and shifts in preference for various product attributes.
Consumer demand could change based on a number of possible factors, including dietary habits and nutritional values, concerns regarding the health of ingredients and the environmental effects of ingredients and packaging, and shifts in preference for various product attributes.
Additionally, as discussed further in Note 18, we are subject to consumer class actions, and other lawsuits alleging some form of personal injury, relating to our Earth’s Best ® baby food products. Even when not merited, the defense of these lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits.
Additionally, as discussed further in Note 17, we are subject to consumer class actions, and other lawsuits alleging some form of personal injury, relating to our Earth’s Best ® baby food products. Even when not merited, the defense of these lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits.
For example, as discussed in Note 18, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, we are subject to consumer class actions, and other lawsuits alleging some form of personal injury, relating to our Earth’s Best ® baby food products.
For example, as discussed in Note 17, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, we are subject to consumer class actions, and other lawsuits alleging some form of personal injury, relating to our Earth’s Best ® baby food products.
For example, as discussed in Note 18, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, we are currently subject to class actions and derivative complaints arising out of or related to the Company’s prior internal accounting review.
For example, as discussed in Note 17, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, we are currently subject to class actions and derivative complaints arising out of or related to the Company’s prior internal accounting review.
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 (interest rates, etc.), 21 Table of Contents lower than expected sales and profit growth rates, changes in industry Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) multiples, the inability to quickly replace lost co-manufacturing business, or the bankruptcy of a significant customer.
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 (interest rates, etc.), lower than expected sales and profit growth rates, changes in industry Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) multiples, the inability to quickly replace lost co-manufacturing business, or the bankruptcy of a significant customer.
We may not be successful in fully implementing our productivity plans or realizing our anticipated savings and efficiencies, including potentially as a result of factors outside our control. Additionally, we may not be able to identify or negotiate divestiture opportunities on terms acceptable to us.
We may not be successful in fully implementing our cost savings plans or realizing our anticipated savings and efficiencies, including potentially as a result of factors outside our control. Additionally, we may not be able to identify or negotiate divestiture opportunities on terms acceptable to us.
In our United States operating segment, we rely upon sales made by or through non-affiliated distributors to customers. Distributors purchase directly for their own account for resale. The loss of, or business disruption at, one or more of these distributors may harm our business.
In the United States, we rely upon sales made by or through non-affiliated distributors to customers. Distributors purchase directly for their own account for resale. The loss of, or business disruption at, one or more of these distributors may harm our business.
Such natural disasters and adverse weather conditions can be caused or exacerbated by climate change, and the spate of recent extreme weather events, including historic droughts, heatwaves, extreme cold and flooding , presents an alarming trend.
Such natural disasters and adverse weather conditions can be caused or exacerbated by climate change, and the spate of recent extreme weather and climate-related events, including historic droughts, heatwaves, wildfires, extreme cold and flooding, presents an alarming trend.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. The spate of recent extreme weather events, including historic droughts, heatwaves, extreme cold and flooding , presents an alarming trend.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. The spate of recent extreme weather and climate-related events, including historic droughts, heatwaves, wildfires, extreme cold and flooding , presents an alarming trend.
The natural and organic ingredients that we use in the production of our products (including, among others, vegetables, fruits, nuts and grains) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity, temperature extremes, wildfires, frosts, earthquakes and pestilences.
The natural and organic ingredients that we use in the production of our products (including, among others, vegetables, fruits, nuts and grains) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity, 14 Table of Contents temperature extremes, wildfires, frosts, earthquakes and pestilences.
Consequently, we are subject to a heightened risk of legal claims, government investigations and other regulatory enforcement actions. We are subject 19 Table of Contents to extensive regulations in the United States, United Kingdom, Canada, Europe, Asia, including India, and any other countries where we manufacture, distribute and/or sell our products.
Consequently, we are subject to a heightened risk of legal claims, government investigations and other regulatory enforcement actions. We are subject to extensive regulations in the United States, United Kingdom, Canada, Europe, Asia, including India, and any other countries where we manufacture, distribute and/or sell our products.
A significant shift in consumer demand away from our products could reduce the sales of our brands or our market share, both of which could harm our business. A significant percentage of our sales is concentrated among a small number of customers, and consolidation of customers or the loss of a significant customer could negatively impact our sales and profitability.
A significant shift in consumer demand away from our products could reduce the sales of our brands or our market share, both of which could harm our business. 13 Table of Contents A significant percentage of our sales is concentrated among a small number of customers, and consolidation of customers or the loss of a significant customer could negatively impact our sales and profitability.
As a result of these outsourcing arrangements, we may experience interruptions or delays in our order-to-cash and procure-to-pay processes, loss or theft of sensitive data or other cyber security issues, compliance issues, challenges in maintaining and reporting financial and operational information, and increased costs to remediate any unanticipated issues that arise, any of which could materially and adversely affect our business, financial condition and results of operations.
As a result of these outsourcing arrangements, we may experience interruptions or delays in our processes, loss or theft of sensitive data or other cyber security issues, compliance issues, challenges in maintaining and reporting financial and operational information, and increased costs to remediate any unanticipated issues that arise, any of which could materially and adversely affect our business, financial condition and results of operations.
Although we have no present intention to issue any shares of our preferred stock, we may do so in the future under appropriate circumstances. General Risk Factors We may be subject to significant liability that is not covered by insurance.
Although we have no present intention to issue any shares of our preferred stock, we may do so in the future under appropriate circumstances. 20 Table of Contents General Risk Factors We may be subject to significant liability that is not covered by insurance.
These risk factors should be read in conjunction with the other information in this Annual Report on Form 10-K and in the other documents that we file from time to time with the SEC. Risks Related to Our Business, Operations and Industry 12 Table of Contents Our markets are highly competitive. We operate in highly competitive geographic and product markets.
These risk factors should be read in conjunction with the other information in this Annual Report on Form 10-K and in the other documents that we file from time to time with the SEC. Risks Related to Our Business, Operations and Industry Our markets are highly competitive. We operate in highly competitive geographic and product markets.
For the fiscal years ended June 30, 2022, 2021 and 2020, approximately 45%, 52% and 51%, respectively, of our consolidated sales were generated outside the United States. Sales from outside our U.S. markets may continue to represent a significant portion of our consolidated sales in the future.
For the fiscal years ended June 30, 2023, 2022 and 2021, approximately 43%, 45% and 52%, respectively, of our consolidated sales were generated outside the United States. Sales from outside our U.S. markets may continue to represent a significant portion of our consolidated sales in the future.
Recent labor market shortages have impacted, and may continue to impact, operations at our manufacturing facilities. Loss of one or more of our independent contract manufacturers could adversely affect our business. During fiscal 2022, 2021 and 2020, approximately 49% , 39% and 41% , respectively, of our sales were derived from products manufactured at independent contract manufacturers, or co-manufacturers.
Labor market shortages have impacted, and may continue to impact, operations at our manufacturing facilities. Loss of one or more of our independent contract manufacturers could adversely affect our business. During fiscal 2023, 2022 and 2021, approximately 42% , 49% and 39% , respectively, of our sales were derived from products manufactured at independent contract manufacturers, or co-manufacturers.
A significant percentage of our sales is concentrated among a small number of customers. For example, sales to Walmart Inc. and its affiliates approximated 15%, 11% and 12% of sales during the fiscal years ended June 30, 2022, 2021 and 2020, respectively.
A significant percentage of our sales is concentrated among a small number of customers. For example, sales to Walmart Inc. and its affiliates approximated 16%, 15% and 11% of sales during the fiscal years ended June 30, 2023, 2022 and 2021, respectively.
Our business, operating results and financial condition may be adversely affected by the failure to successfully execute acquisitions or dispositions or to successfully integrate completed acquisitions. 16 Table of Contents From time to time, we evaluate potential acquisitions or dispositions that align with our strategic objectives.
Our business, operating results and financial condition may be adversely affected by the failure to successfully execute acquisitions or dispositions or to successfully integrate completed acquisitions. From time to time, we evaluate potential acquisitions or dispositions that align with our strategic objectives.
The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date (or subsequent impairment date, if applicable).
The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable ass ets and liabilities as of the acquisition date (or subsequent impairment date, if applicable).
Foreign Corrupt Practices Act and the Office of Foreign Assets Control trade sanction regulations and anti-boycott regulations; • difficulties associated with operating under a wide variety of complex foreign laws, treaties and regulations, including compliance with antitrust and competition laws, anti-modern slavery laws, anti-bribery and anti-corruption laws, data privacy laws, including the European Union General Data Protection Regulation (“GDPR”), tax laws and regulations and a variety of other local, national and multi-national regulations and laws; • tariffs, quotas, trade barriers or sanctions, other trade protection measures and import or export licensing requirements imposed by governments that might negatively affect our sales, including, but not limited to, Canadian and European Union tariffs imposed on certain U.S. food and beverages; • currency exchange rate fluctuations; • pandemics, such as COVID-19 or the flu, which may adversely affect our workforce as well as our local suppliers and customers; • varying abilities to enforce intellectual property and contractual rights; • periodic economic downturns and the instability of governments, including default or deterioration in the credit worthiness of local governments, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, public corruption, expropriation and other economic or political uncertainties; and • greater risk of uncollectible accounts and longer collection cycles.
Foreign Corrupt Practices Act and the Office of Foreign Assets Control trade sanction regulations and anti-boycott regulations; • difficulties associated with operating under a wide variety of complex foreign laws, treaties and regulations, including compliance with antitrust and competition laws, anti-modern slavery laws, anti-bribery and anti-corruption laws, data privacy laws, including the European Union General Data Protection Regulation (“GDPR”), tax laws and regulations and a variety of other local, national and multi-national regulations and laws; • tariffs, quotas, trade barriers or sanctions, other trade protection measures and import or export licensing requirements imposed by governments that might negatively affect our sales, including, but not limited to, Canadian and European Union tariffs imposed on certain U.S. food and beverages; • currency exchange rate fluctuations; • varying abilities to enforce intellectual property and contractual rights; • periodic economic downturns and the instability of governments, including default or deterioration in the credit worthiness of local governments, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, public corruption, instability in the financial services sector, expropriation and other economic or political uncertainties; and • greater risk of uncollectible accounts and longer collection cycles.
Our ability to ensure a continuing supply of natural and organic ingredients at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow natural and organic crops, climate conditions, increased demand for natural and organic ingredients by our competitors, changes in national and world economic conditions, currency fluctuations and forecasting adequate need of seasonal ingredients.
Our ability to ensure a continuing supply of natural and organic ingredients used in certain of our products at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow natural and organic crops, climate conditions, increased demand for natural and organic ingredients by our competitors for these scarce ingredients, climate conditions, global unrest and changes in national and world economic conditions, currency fluctuations and forecasting adequate need of seasonal ingredients.
For the fiscal years ended June 30, 2022, 2021 and 2020, approximately 51% , 61% and 59% , respectively, of our sales were derived from products manufactured at our own manufacturing facilities.
For the fiscal years ended June 30, 2023, 2022 and 2021, approximately 58% , 51% and 61% , respectively, of our sales were derived from products manufactured at our own manufacturing facilities.
Our compliance with such existing laws and regulations and a ny new laws or regulations enacted in the future, or any changes in how existing laws or regulations will be enforced, administered or interpreted, may lead to an increase in compliance costs, cause us to change the way we operate or expose us to additional risk of liabilities and claims, which could have a material adverse effect on our business, results of operations and financial condition.
Our compliance with such existing laws and regulations and a ny new laws or regulations enacted in the future, or any changes in how existing laws or regulations will be enforced, administered or interpreted, may lead to an increase in compliance costs, cause us to change the way we operate or expose us to additional risk of liabilities and claims, which could have a material adverse effect on our business, results of operations and financial condition. 18 Table of Contents Risks Related to Litigation, Government Regulation and Compliance Pending and future litigation may lead us to incur significant costs.
As a result, changes in the values of currencies may unpredictably and adversely impact our consolidated operating results, our asset and liability balances and our cash flows in our consolidated financial statements even if their value has not changed in their original currency.
As a result, changes in the values of currencies may unpredictably and adversely impact our consolidated operating results, our asset and liability balances and our cash flows in our consolidated financial statements even if their value has not changed in their original currency. 16 Table of Contents Disruptions in the worldwide economy and the financial markets may adversely impact our business and results of operations.
We must comply with the requirements of independent organizations or certification authorities in order to label our products as certified organic. For example, we can lose our “organic” certification if a manufacturing plant becomes contaminated with non-organic materials, or if it is not properly cleaned after a production run. In addition, all raw materials must be certified organic.
For example, we can lose our “organic” certification if a manufacturing plant becomes contaminated with non-organic materials, or if it is not properly cleaned after a production run. In addition, all raw materials must be certified organic.
Although we are continuing to monitor and manage the impacts of the war on our business, the war and the related economic impact could continue to have a material adverse effect on our business and operating results. Disruption or loss of operations at one or more of our manufacturing facilities could harm our business.
Although we are continuing to monitor and manage the impacts of the war on our business, the war and the related economic impact could continue to have a material adverse effect on our business and operating results.
In particular, the war has added significant costs to existing inflationary pressures through increased fuel and raw material prices and labor costs. Further, beyond increased costs, labor challenges and other factors have led to supply chain disruptions. While, to date, we have been able to identify replacement raw materials where necessary, we have incurred increased costs in doing so.
Further, beyond increased costs, labor challenges and other factors have led to supply chain disruptions. While, to date, we have been able to identify replacement raw materials where necessary, we have incurred increased costs in doing so.
If we are unable to fully realize the anticipated savings and efficiencies of our cost reduction initiatives and related strategic initiatives, our profitability may be materially and adversely impacted.
If we are unable to fully realize the anticipated savings and efficiencies of our cost reduction initiatives and related strategic initiatives, our profitability may be materially and adversely impacted. The Russia-Ukraine war could continue to cause challenges and create risks for our business.
Consumers may also reduce the number of organic and natural 17 Table of Contents products that they purchase where there are conventional alternatives, given that organic and natural products generally have higher retail prices than do their conventional counterparts.
Consumers may also reduce the number of organic and natural products that they purchase where there are conventional alternatives, given that organic and natural products generally have higher retail prices than do their conventional counterparts. In addition, consumers may choose to purchase private label products rather than branded products, which generally have lower retail prices than do their branded counterparts.
Our business is primarily focused on sales of organic, natural and “better-for-you” products which, if consumer demand for such categories were to decrease, could harm our business.
Our growth and continued success depend upon consumer preferences for our products, which could change. Our business is primarily focused on sales of organic, natural and better-for-you products which, if consumer demand for such categories were to decrease, could harm our business.
If we are not successful in executing acquisitions or divestitures or in integrating completed acquisitions, our business, operating results and financial condition could be adversely affected. We rely on independent certifications for a number of our products. We rely on independent third-party certifications, such as certifications of our products as “organic,” “Non-GMO” or “kosher,” to differentiate our products from others.
If we are not successful in executing acquisitions or divestitures or in integrating completed acquisitions, our business, operating results and financial condition could be adversely affected. 15 Table of Contents We rely on independent certifications for a number of our products.
In addition, the costs and other effects of defending potential and pending litigation and administrative actions against us may be difficult to determine and could adversely affect our financial condition and operating results. Pending and future litigation may lead us to incur significant costs.
In addition, the costs and other effects 19 Table of Contents of defending potential and pending litigation and administrative actions against us may be difficult to determine and could adversely affect our financial condition and operating results. Compliance with data privacy laws may be costly, and non-compliance with such laws may result in significant liability.
As of June 30, 2022, we had goodwill of $933.8 million and trademarks and other intangibles assets of $477.5 million, which in the aggregate represented 57% of our total consolidated assets.
As of June 30, 2023, we had goodwill of $938.6 million and trademarks and other intangibles assets of $298.1 million, which in the aggregate represented 55% of our total consolidated assets.
Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. Compliance with data privacy laws may be costly, and non-compliance with such laws may result in significant liability.
Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. We may be subject to significant liability should the consumption of any of our products cause illness or physical harm.
The breach of any of these covenants could result in a default, which would permit the lenders to declare all outstanding debt to be due and payable, together with accrued and unpaid interest.
Our ability to comply with these covenants under the credit agreement may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these covenants could result in a default, which would permit the lenders to declare all outstanding debt to be due and payable, together with accrued and unpaid interest.
Volatile fuel costs translate into unpredictable costs for the products and services we receive from our third-party providers including, but not limited to, distribution costs for our products and packaging costs. 13 Table of Contents While we seek to offset increased input costs with a combination of price increases to our customers, purchasing strategies, cost savings initiatives and operating efficiencies, we may be unable to fully offset our increased costs or unable to do so in a timely manner.
While we seek to offset increased input costs with a combination of price increases to our customers, purchasing strategies, cost savings initiatives and operating efficiencies, we may be unable to fully offset our increased costs or unable to do so in a timely manner.
In addition, customers may cancel orders for such products as a result of such events. Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us.
Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us.
We also implemented new procurement technology solutions as part of this initiative. We face risks associated with third parties managing these functions for us. For example, we have diminished control over the quality and timeliness of the outsourced services, including the cyber security protections implemented by these third parties.
We have outsourced certain business processes in the areas of supply chain, accounting and information technology to managed service providers, globally. We face risks associated with third parties managing these functions for us. For example, we have diminished control over the quality and timeliness of the outsourced services, including the cyber security protections implemented by these third parties.
Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage. Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products or cease operations, which may lead to a material adverse effect on our business.
Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products or cease operations, which may lead to a material adverse effect on our business. In addition, customers may cancel orders for such products as a result of such events.
Failure to comply with GDPR or CCPA requirements or other data privacy laws could result in litigation, adverse publicity and significant penalties and damages. The law in this area continues to develop, and the changing nature of privacy laws could impact the Company’s processing of personal information related to the Company’s employees, consumers, customers and vendors.
The law in this area continues to develop, and the changing nature of privacy laws could impact the Company’s processing of personal information related to the Company’s job applicants, employees, consumers, customers and vendors.
Although we have no material assets in Russia, Belarus or Ukraine, our supply chain has been, and may continue to be, adversely impacted by the Russia-Ukraine war, and we continue to face other challenges and risks arising from the war.
Although we have no material assets in Russia, Belarus or Ukraine, our supply chain has been, and may continue to be, adversely impacted by the Russia-Ukraine war. In particular, the war has added significant costs to existing inflationary pressures through increased fuel and raw material prices and labor costs.
Many jurisdictions in which the Company operates have laws and regulations relating to data privacy and protection of personal information, including the European Union GDPR and the California Consumer Privacy Act of 2018 (“CCPA”). Other U.S. states have, in recent years, begun to adopt their own omnibus, industry-neutral privacy statutes, such as Colorado, Connecticut, Utah and Virginia.
Many jurisdictions in which the Company operates have laws and regulations relating to data privacy and protection of personal information, including the European Union GDPR and the California Consumer Privacy Act of 2018 (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”).
Our consolidated financial statements are presented in United States Dollars, requiring us to translate our assets, liabilities, revenue and expenses into United States Dollars.
Risks Related to Economic Considerations Currency exchange rate fluctuations could adversely affect our consolidated financial results and condition. We are subject to risks related to fluctuations in currency exchange rates. Our consolidated financial statements are presented in United States Dollars, requiring us to translate our assets, liabilities, revenue and expenses into United States Dollars.
Our future results of operations may be adversely affected by input cost inflation. Many aspects of our business have been, and may continue to be, directly affected by volatile commodity costs and other inflationary pressures. Our input costs began to increase significantly beginning in the latter part of fiscal 2021.
Many aspects of our business have been, and may continue to be, directly affected by volatile commodity costs and other inflationary pressures.
Our inability to enter into satisfactory distribution agreements may inhibit our ability to implement our business plan or to establish markets necessary to successfully expand the distribution of our products. Our future results of operations may be adversely affected by the availability of natural and organic ingredients.
Our inability to enter into satisfactory distribution agreements may inhibit our ability to implement our business plan or to establish markets necessary to successfully expand the distribution of our products. We are subject to risks associated with our international sales and operations, including foreign currency, compliance and trade risks.
In addition, our information technology systems may be vulnerable to damage or interruption from 18 Table of Contents circumstances beyond our control, including fire, natural disasters, system failures and viruses. Any such damage or interruption could have a material adverse effect on our business. Risks Related to ESG Considerations Climate change may negatively affect our business and operations.
In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, system failures and viruses.
Prolonged unfavorable economic conditions may have an adverse effect on any of these factors and, therefore, could adversely impact our sales and profitability. Currency exchange rate fluctuations could adversely affect our consolidated financial results and condition. We are subject to risks related to fluctuations in currency exchange rates.
Distributors and retailers may also become more conservative in response to these conditions and seek to reduce their inventories. Prolonged unfavorable economic conditions may have an adverse effect on any of these factors and, therefore, could adversely impact our sales and profitability.
The credit agreement also requires us to satisfy certain financial covenants, such as maintaining a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio. 20 Table of Contents Our ability to comply with these covenants under the credit agreement may be affected by events beyond our control, including prevailing economic, financial and industry conditions.
The credit agreement requires us to satisfy certain financial covenants, such as maintaining a maximum consolidated secured leverage ratio and a minimum consolidated interest coverage ratio.
If we are unable to fully offset such cost increases, our financial results could be materially adversely affected. The Russia-Ukraine war could continue to cause challenges and create risks for our business.
If we are unable to fully offset such cost increases, our financial results could be materially adversely affected. Disruption or loss of operations at one or more of our manufacturing facilities could harm our business.
The incurrence of impairment charges could negatively affect our results of operations and adversely impact our net worth and our consolidated earnings in the period of such charge.
For example, during fiscal 2023, we recorded aggregate non-cash impairment charges of $174.9 million related to certain trademarks and intangible assets to reduce their carrying value to their estimated fair value. The incurrence of additional impairment charges could negatively affect our results of operations and adversely impact our net worth and our consolidated earnings in the period of such charge.
See “The Russia-Ukraine war could continue to cause challenges and create risks for our business.” If we are unable to manage our supply chain efficiently and ensure that our products are available to meet consumer demand and customer orders, our sales and profitability could be materially adversely impacted.
If we are unable to manage our supply chain efficiently and ensure that our products are available to meet consumer demand and customer orders, our sales and profitability could be materially adversely impacted. 12 Table of Contents Our future results of operations may be adversely affected by input cost inflation, including with respect to freight and other distribution costs.
Any default by us under the credit agreement could have a material adverse effect on our business and financial condition. We may be adversely impacted by the discontinuation of the London Interbank Offered Rate, or LIBOR. We have loans under our credit facility and interest rate swap agreements that are indexed to LIBOR, which is being replaced.
Any default by us under the credit agreement could have a material adverse effect on our business and financial condition. Risks Related to Corporate Governance Our ability to issue preferred stock may deter takeover attempts.
Risks Related to Litigation, Government Regulation and Compliance We may be subject to significant liability should the consumption of any of our products cause illness or physical harm. The sale of products for human use and consumption involves the risk of injury or illness to consumers.
The sale of products for human use and consumption involves the risk of injury or illness to consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage.
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In particular, the Russia-Ukraine war and recent labor market shortages impacting our industry have created operating challenges in making our products available to customers and consumers, and such challenges may persist.
Added
Volatile fuel costs and other factors translate into unpredictable costs for the products and services we receive from our third-party providers including, but not limited to, freight and other distribution costs for our products and packaging costs.
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That inflationary environment extended through fiscal 2022, and we expect the inflationary environment to continue throughout fiscal 2023.
Added
Our future results of operations may be adversely affected by the availability of natural and organic ingredients.
Removed
For example, the supply of sunflower oil has become constrained, compelling us to identify and procure alternative oils. The war has also negatively impacted consumer sentiment, particularly in Europe, with some consumers shifting to lower-priced products, which has affected demand for our products.
Added
We rely on independent third-party certifications, such as certifications of our products as “organic,” “Non-GMO” or “kosher,” to differentiate our products from others. We must comply with the requirements of independent organizations or certification authorities in order to label our products as certified organic.
Removed
Additionally, we face increased cybersecurity risks, as companies based in the United States and its allied countries have become targets of malicious cyber activity.
Added
Any such damage or interruption could have a material adverse effect on our business. 17 Table of Contents Risks Related to ESG Considerations Changing rules, public disclosure regulations and stakeholder expectations on ESG-related matters create a variety of risks for our business. Increasingly, regulators, consumers, customers, investors, employees and other stakeholders are focusing on ESG matters and related disclosures.
Removed
The COVID-19 pandemic continues to have societal and economic effects that create challenges and uncertainty, and our business and operating results may be adversely affected if we do not manage our business effectively in response. The COVID-19 pandemic continues to contribute to challenging and unprecedented conditions.
Added
These changing rules, public disclosure regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased management time and attention spent complying with or meeting such regulations and expectations.
Removed
The impacts of the pandemic could exacerbate conditions in our other risk factors noted in this Item 1A, “Risk Factors.” Challenges exacerbated by the ongoing effects of the pandemic include but are not limited to: • manufacturing and supply chain challenges, including labor market shortages; • a shifting demand environment as a result of changing consumer behaviors amid uncertain economic conditions; and • increased costs of operating our business and managing our supply chain.
Added
For example, developing and acting on initiatives within the scope of ESG, and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards, including the SEC’s proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
Removed
If we are unable to successfully manage our business through the continued challenges and uncertainty related to the COVID-19 pandemic, our business and operating results could be materially adversely affected. Our growth and continued success depend upon consumer preferences for our products, which could change.
Added
This rapidly changing environment may result in increased general and administrative expenses. We may also communicate certain initiatives and goals regarding environmental matters, diversity and other ESG-related matters. These initiatives and goals could be difficult and expensive to implement, and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
Removed
As noted above, other factors can and have adversely impacted consumer demand for our products, including the Russia-Ukraine war, which has prompted consumers, particularly in 14 Table of Contents Europe to shift to lower-priced products, affecting demand for our products.
Added
Further, statements about our ESG-related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Removed
This could cause our expenses to increase or could limit the amount of products that we can manufacture and sell. 15 Table of Contents We are subject to risks associated with our international sales and operations, including foreign currency, compliance and trade risks.
Added
In addition, we could be criticized for the scope or nature of such initiatives or goals, or for any revisions to these goals.
Removed
Risks Related to Economic and Political Considerations Disruptions in the worldwide economy and the financial markets may adversely impact our business and results of operations.
Added
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, our reputation, business, results of operations and financial condition could be adversely impacted. Climate change may negatively affect our business and operations.
Removed
In addition, consumers may choose to purchase private label products rather than branded products, which generally have lower retail prices than do their branded counterparts. Distributors and retailers may also become more conservative in response to these conditions and seek to reduce their inventories.
Added
In recent years, other U.S. states such as Colorado, Connecticut, Indiana, Iowa, Montana, Tennessee, Utah and Virginia have begun to adopt their own privacy statutes, which may apply to the Company. Failure to comply with GDPR or CCPA requirements or other data privacy laws could result in litigation, adverse publicity and significant penalties and damages.
Removed
A significant portion of our business has exposure to continued uncertainty and burdens in the United Kingdom following its exit from the European Union, commonly referred to as “Brexit.” In fiscal years 2022 and 2021, approximately 26% and 31%, respectively, of our consolidated sales were generated in the United Kingdom, which continues to experience economic and market uncertainty following Brexit.
Added
For further information, see Note 8, Goodwill and Other Intangible Assets , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Our principal facilities, which are leased except where otherwise indicated, are as follows: Primary Use Location Approximate Square Feet Expiration of Lease North America: Headquarters office Lake Success, NY 86,000 2029 Distribution - All brands Allentown, PA 497,000 2032 Distribution center (Grocery, snacks, and personal care products) Ontario, CA 373,000 2023 Manufacturing and distribution center (Snack products) Mountville, PA 161,000 2040 Manufacturing and offices (Tea) Boulder, CO 158,000 Owned Distribution (Dry goods) Mississauga, ON, Canada 136,000 2029 Manufacturing and distribution (Personal care) Bell, CA 125,000 2028 Manufacturing and distribution (Snack products) Lancaster, PA 119,000 2031 Distribution (Personal care) Mississauga, ON, Canada 81,000 2029 Manufacturing (Plant-based foods) Vancouver, BC, Canada 76,000 Owned Manufacturing and distribution (Snack products) York, PA 71,000 2030 Manufacturing and offices (Personal care) Mississauga, ON, Canada 61,000 2025 Distribution (Tea) Boulder, CO 57,000 2031 Manufacturing (Plant-based foods) Trenton, ON, Canada 47,000 2028 International: Manufacturing and offices (Ambient grocery products) Histon, England 303,000 Owned Manufacturing, distribution and offices (Plant-based beverages) Troisdorf, Germany 131,000 2037 Manufacturing Oberwart, Austria 117,000 At will Distribution Loipersdorf, Austria 74,000 At will Distribution Gent, Belgium 64,000 At will Distribution Niederziers, Germany 54,000 At will Manufacturing (Chilled soups) Grimsby, England 54,000 2029 Manufacturing (Plant-based frozen and chilled products) Fakenham, England 52,000 Owned Distribution (Soups, hot desserts, chilled products, grocery) Peterborough, England 43,000 2024 Manufacturing (Hot-eating desserts) Clitheroe, England 42,000 2031 Manufacturing and distribution (Plant-based foods and beverages) Schwerin, Germany 36,000 Owned We also lease space for other smaller offices and facilities in the United States, United Kingdom, Canada, Europe and other parts of the world.
Biggest changeProperties Our principal facilities, which are leased except where otherwise indicated, are as follows: Primary Use Location Approximate Square Feet Expiration of Lease North America: Temporary headquarters office and Manufacturing (Tea) Boulder, CO 158,000 Owned Distribution - All brands Allentown, PA 497,000 2032 Distribution center (Grocery, snacks, and personal care products) Ontario, CA 373,000 2023 Manufacturing and distribution center (Snack products) Mountville, PA 161,000 2040 Distribution (Dry goods) Mississauga, ON, Canada 136,000 2029 Manufacturing and distribution (Personal care) Bell, CA 125,000 2038 Manufacturing and distribution (Snack products) Lancaster, PA 119,000 2031 Distribution (Personal care) Mississauga, ON, Canada 81,000 2029 Manufacturing (Plant-based foods) Vancouver, BC, Canada 76,000 Owned Manufacturing and distribution (Snack products) York, PA 71,000 2030 Manufacturing and offices (Personal care) Mississauga, ON, Canada 61,000 2025 Distribution (Tea) Boulder, CO 57,000 2031 International: Manufacturing and offices (Ambient grocery products) Histon, England 303,000 Owned Manufacturing, distribution and offices (Plant-based beverages) Troisdorf, Germany 131,000 2037 Manufacturing Oberwart, Austria 117,000 At will Manufacturing (Plant-based frozen and chilled products) Fakenham, England 101,000 Owned Distribution Gent, Belgium 64,000 At will Distribution Niederziers, Germany 54,000 At will Manufacturing (Chilled soups) Grimsby, England 54,000 2029 Distribution (Soups, hot desserts, chilled products, grocery) Peterborough, England 43,000 2024 Manufacturing (Hot-eating desserts) Clitheroe, England 42,000 2031 Distribution Loipersdorf, Austria 41,000 At will Manufacturing and distribution (Plant-based foods and beverages) Schwerin, Germany 36,000 Owned We also lease space for other smaller offices and facilities in the United States, United Kingdom, Canada, Europe and other parts of the world.
For further information regarding the use of our properties by segments, see Item 1, “Business - Production” of this Form 10-K. 23 Table of Contents
For further information regarding our lease obligations, see Not e 7, Leases , in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. For further information regarding the use of our properties by segments, see Item 1, “Business - Production” of this Form 10-K. 22 Table of Contents
In addition to the foregoing distribution facilities operated by us, we also utilize bonded public warehouses from which deliveries are made to customers. For further information regarding our lease obligations, see Not e 7, Leases , in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
In addition to the foregoing distribution facilities operated by us, we also utilize bonded public warehouses from which deliveries are made to customers. Subsequent to June 30, 2023, the Company entered into an operating lease for its new global headquarters, which has not yet commenced.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information called for by this item is incorporated herein by reference to Note 18, Commitments and Contingencies , in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Biggest changeItem 3. 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 II, Item 8 of this Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of June 30, 2022, the Company had $174 million of remaining authorization under the share repurchase program. 25 Table of Contents Stock Performance Graph The following graph compares the performance of our common stock to the S&P 500 Index, the S&P Smallcap 600 Index and the S&P Packaged Foods & Meats Index (in which we are included) for the period from June 30, 2017 through June 30, 2022.
Biggest changeAs of June 30, 2023, the Company had $174 million of remaining authorization under the share repurchase program. 24 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock during the period from June 30, 2018 through June 30, 2023 to the cumulative total shareholder return during such period on (1) the S&P 500 Index, (2) the S&P SmallCap 600 Index, (3) the S&P 500 Packaged Foods & Meats Index and (4) the S&P Food & Beverage Select Industry Index (in which we are included).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Outstanding shares of our common stock, par value $0.01 per share, are listed on The Nasdaq Stock Market LLC under the ticker symbol “HAIN”. Holders As o f August 18, 2022, there were 222 holders o f record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Outstanding shares of our common stock, par value $0.01 per share, are listed on The Nasdaq Stock Market LLC under the ticker symbol “HAIN”. Holders As of August 17, 2023, there were 222 holde rs o f record of our common stock.
Period (a) Total number of shares purchased (1) (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans (d) Approximate dollar value of shares that may yet be purchased under the plans (in millions) (2) April 1, 2022 - April 30, 2022 213 $ 33.54 — $ 186.6 May 1, 2022 - May 31, 2022 292 24.78 — 186.6 June 1, 2022 - June 30, 2022 500,713 26.13 500,000 173.5 Total 501,218 $ 28.15 500,000 (1) Includes shares surrendered for payment of employee payroll taxes due on shares issued under stock-based compensation plans and shares repurchased under share repurchase programs approved by the Board of Directors.
Period (a) Total number of shares purchased (1) (b) Average price paid, per share (c) Total number of shares purchased as part of publicly announced plans (d) Approximate dollar value of shares that may yet be purchased under the plans (in millions) (2) April 1, 2023 - April 30, 2023 7,612 $ 21.05 — $ 173.5 May 1, 2023 - May 31, 2023 — — — $ 173.5 June 1, 2023 - June 30, 2023 16,342 12.48 — $ 173.5 Total 23,954 $ 15.21 — (1) Includes shares surrendered for payment of employee payroll taxes due on shares issued under stock-based compensation plans and shares repurchased under share repurchase programs approved by the Board of Directors, if any.
Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise. The cur rent 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.
The authorization does not have a stated expiration date. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations. During the fiscal year ended June 30, 2023, the Company did not repurchase any shares under the repurchase program.
See (2) below for further details. (2) In June 2017, August 2021 and January 2022, the Company's Board of Directors authorized the repurchase of up to $250 million, $300 million and $200 million of the Company’s issued and outstanding common stock, respectively. Share repurchases under each of the 2021 and 2022 authorizations commenced after the previous authorizations were fully utilized.
See (2) below for further details. (2) In January 2022, the Company's Board of Directors authorized the repurchase of up to $200 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.
Removed
During the quarter ended June 30, 2022, the Company repurchased 500,000 shares under the repurchase program for a total of $13 million , excluding commissions, at an average price of $26.13 per share.
Added
In next year’s performance graph, we do not plan to include the S&P 500 Index or the S&P 500 Packaged Foods & Meats Index, which we have historically used as our broad equity market index and our industry or line-of-business index, respectively, for purposes of the stock performance graph.
Added
In accordance with SEC rules, these indices are included in the performance graph below as we transition to new comparison indices, namely the S&P SmallCap 600 Index and the S&P Food & Beverage Select Industry Index.
Added
We believe that the S&P SmallCap 600 Index provides a more relevant broad equity market comparison than the S&P 500 Index based on our market capitalization.
Added
Further, we believe that the S&P Food & Beverage Select Industry Index includes a broader and more representative range of companies (in terms of both market capitalization and specific product categories within the food and beverage sector) than the companies comprising the S&P 500 Packaged Foods & Meats Index and that the S&P Food & Beverage Select Industry Index therefore provides a more relevant comparison against which to compare our cumulative total shareholder return.
Added
Additionally, certain of our incentive-based compensation awards are based on our total shareholder return relative to that of the S&P Food & Beverage Select Industry Index over the applicable performance period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Comparison of Fiscal Yea r E nded June 30, 2022 to Fiscal Ye ar En ded June 30, 2021 Consolidated Results The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the fiscal years ended June 30, 2022 and 2021 (amounts in thousands, other than percentages which may not add due to rounding): Fiscal Year Ended June 30, Change in 2022 2021 Dollars Percentage Net sales $ 1,891,793 100.0 % $ 1,970,302 100.0 % $ (78,509) (4.0) % Cost of sales 1,464,352 77.4 % 1,478,687 75.0 % (14,335) (1.0) % Gross profit 427,441 22.6 % 491,615 25.0 % (64,174) (13.1) % Selling, general and administrative expenses 300,665 15.9 % 302,368 15.3 % (1,703) (0.6) % Amortization of acquired intangible assets 10,214 0.5 % 8,931 0.5 % 1,283 14.4 % Productivity and transformation costs 10,174 0.5 % 15,608 0.8 % (5,434) (34.8) % Proceeds from insurance claims (196) — % (592) — % 396 (66.9)% Long-lived asset and intangibles impairment 1,903 0.1 % 57,920 2.9 % (56,017) (96.7) % Operating income 104,681 5.5 % 107,380 5.4 % (2,699) (2.5) % Interest and other financing expense, net 12,570 0.7 % 8,654 0.4 % 3,916 45.3 % Other income, net (11,380) (0.6) % (10,067) (0.5) % (1,313) 13.0% Income from continuing operations before income taxes and equity in net loss of equity-method investees 103,491 5.5 % 108,793 5.5 % (5,302) (4.9) % Provision for income taxes 22,716 1.2 % 41,093 2.1 % (18,377) (44.7) % Equity in net loss of equity-method investees 2,902 0.2 % 1,591 0.1 % 1,311 82.4 % Net income from continuing operations $ 77,873 4.1 % $ 66,109 3.4 % $ 11,764 17.8 % Net income from discontinued operations, net of tax — — % 11,255 0.6 % (11,255) (100.0)% Net income $ 77,873 4.1 % $ 77,364 3.9 % $ 509 0.7% Adjusted EBITDA $ 200,616 10.6 % $ 258,938 13.1 % $ (58,322) (22.5) % Net Sales Net sales in fiscal 2022 w ere $1.89 billion, a decrease of $78.5 million, or 4.0%, from net sales of $1.97 billion in fiscal 2021 as a result of a decrease in sales in the International reportable segment partially offset by an increase in sales in the North America reportable segment.
Biggest changeWhile we are continuing to monitor and manage the impacts of the war on our business, the extent to which the Russia-Ukraine war and the related economic impact may affect our financial condition or results of operations in the future remains uncertain. 27 Table of Contents Results of Operations Comparison of Fiscal Yea r E nded June 30, 2023 to Fiscal Ye ar En ded June 30, 2022 Consolidated Results The following table compares our results of operations, including as a percentage of net sales, on a consolidated basis, for the fiscal years ended June 30, 2023 and 2022 (amounts in thousands, other than percentages which may not add due to rounding): Fiscal Year Ended June 30, Change in 2023 2022 Dollars Percentage Net sales $ 1,796,643 100.0 % $ 1,891,793 100.0 % $ (95,150) (5.0) % Cost of sales 1,400,229 77.9 % 1,464,352 77.4 % (64,123) (4.4) % Gross profit 396,414 22.1 % 427,441 22.6 % (31,027) (7.3) % Selling, general and administrative expenses 289,233 16.1 % 300,469 15.9 % (11,236) (3.7) % Intangibles and long-lived asset impairment 175,501 9.8 % 1,903 0.1 % 173,598 ** Amortization of acquired intangible assets 10,016 0.6 % 10,214 0.5 % (198) (1.9) % Productivity and transformation costs 7,284 0.4 % 10,174 0.5 % (2,890) (28.4) % Operating (loss) income (85,620) (4.8) % 104,681 5.5 % (190,301) (181.8) % Interest and other financing expense, net 45,783 2.5 % 12,570 0.7 % 33,213 264.2 % Other income, net (1,822) (0.1) % (11,380) (0.6) % 9,558 (84.0) % (Loss) income before income taxes and equity in net loss of equity-method investees (129,581) (7.2) % 103,491 5.5 % (233,072) * (Benefit) provision for income taxes (14,178) (0.8) % 22,716 1.2 % (36,894) * Equity in net loss of equity-method investees 1,134 0.1 % 2,902 0.2 % (1,768) (60.9) % Net (loss) income $ (116,537) (6.5) % $ 77,873 4.1 % $ (194,410) * Adjusted EBITDA $ 166,622 9.3 % $ 200,616 10.6 % $ (33,994) (16.9) % Diluted net (loss) income per common share $ (1.30) $ 0.83 $ (2.13) * * Percentage is not meaningful due to one or more numbers being negative. ** Percentage is not meaningful due to significantly lower number in the comparative period Net Sales Net sales in fiscal 2023 were $1.80 billion, a decrease of $95.2 million, or 5.0%, from net sales of $1.89 billion in fiscal 2022.
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 provided by or used in operating activities.
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.
Item 7. 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 (this “MD&A”) should be read in conjunction with Item 1A and the Consolidated Financial Statements and the related notes thereto for the period ended June 30, 2022 included in Item 8 of this Form 10-K.
Item 7. 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 (this “MD&A”) should be read in conjunction with Item 1A and the Consolidated Financial Statements and the related notes thereto for the period ended June 30, 2023 included in Item 8 of this Form 10-K.
The Company’s food and beverage brands include Celestial Seasonings ® , Clarks™, Cully & Sully ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , Garden of Eatin’ ® , Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney’s ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co. ® , ParmCrisps ® , Robertson’s ® , Rose’s ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Greek Gods ® , Thinsters ® , Yorkshire Provender ® and Yves Veggie Cuisi ne ® .
The Company’s food and beverage brands include Celestial Seasonings ® , Clarks™, Cully & Sully ® , Earth’s Best ® , Ella’s Kitchen ® , Frank Cooper’s ® , Garden of Eatin’ ® , Garden Veggie™, Hartley’s ® , Health Valley ® , Imagine ® , Joya ® , Lima ® , Linda McCartney’s ® (under license), MaraNatha ® , Natumi ® , New Covent Garden Soup Co. ® , ParmCrisps ® , Robertson’s ® , Rose’s ® (under license), Sensible Portions ® , Spectrum ® , Sun-Pat ® , Terra ® , The Greek Gods ® , Thinsters ® , Yorkshire Provender ® and Yves Veggie Cuisine ® .
Forward-looking statements in this Form 10-K are qualified by the cautionary statement included under the heading, “Forward-Looking Statements” at the beginning of this Form 10-K. This MD&A generally discusses fiscal 2022 and fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021.
Forward-looking statements in this Form 10-K are qualified by the cautionary statement included under the heading, “Forward-Looking Statements” at the beginning of this Form 10-K. This MD&A generally discusses fiscal 2023 and fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022.
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 determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with 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 determining Adjusted EBITDA. In order to compensate for these limitations, management presents. 35 Table of Contents Adjusted EBITDA in connection with U.S.
Net Sales - Acquisitions, Divestitures and Discontinued Brands We also exclude the impact of acquisitions, divestitures and discontinued brands when comparing net sales to prior periods, which results in the presentation of certain non-U.S. GAAP financial measures.
Net Sales - Adjusted for the Impact of Acquisitions, Divestitures and Discontinued Brands We also exclude the impact of acquisitions, divestitures and discontinued brands when comparing net sales to prior periods, which results in the presentation of certain non-U.S. GAAP financial measures.
Discussions of fiscal 2020 items and year-to-year comparisons between fiscal 2021 and fiscal 2020 that are not included in this Form 10-K can be found in “Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021, which was filed with the SEC on August 26, 2021 and is available on the SEC’s website at www.sec.gov.
Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Form 10-K can be found in “Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022, which was filed with the SEC on August 25, 2022 and is available on the SEC’s website at www.sec.gov.
Equity in Net Loss of Equity-Method Investees Our equity in the net loss from our equity method investments for fiscal 2022 was $2.9 million compared to $1.6 million for fiscal 2021. See Note 14, Investments , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
Equity in Net Loss of Equity-Method Investees Our equity in the net loss from our equity method investments for fiscal 2023 was $1.1 million compared to $2.9 million for fiscal 2022. See Note 14, Investments , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
The effective income tax rate from continuing operations for the twelve months ended June 30, 2022 was primarily impacted by reversal of uncertain tax position accruals based on filing and approval of certain elections by taxing authorities, deductions related to stock-based compensation, non-deductible transaction costs related to the acquisition of THWR (see Note 4, Acquisitions and Dispositions ), the reversal of a valuation allowance due to the utilization of a capital loss carryover, and the finalization of prior fiscal year income tax returns.
The effective income tax rate for the year ended June 30, 2022 was primarily impacted by the reversal of uncertain tax position accruals based on filing and approval of certain elections by taxing authorities, deductions related to stock-based compensation, non-deductible transaction costs related to the acquisition of THWR (see Note 4, Acquisition and Dispositions ), the reversal of a valuation allowance due to the utilization of a capital loss carryover, and the finalization of prior fiscal year income tax returns.
Refer to Note 20, Segm ent Information , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for additional details. 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 Amended Credit Agreement.
Refer to Note 19, Segm ent Information , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for additional details. 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).
In recent years, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters.
In recent years, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters. 39 Table of Contents
The Credit Agreement provides for senior secured financing of $1.1 billion 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 is comprised of a $440.0 million U.S. revolving credit facility and $360.0 million global revolving credit facility) (the "Revolver").
The Credit Agreement provides 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 is comprised of a $440.0 million U.S. revolving credit facility and $360.0 million global revolving credit facility) (the “Revolver”).
The Company completed its annual goodwill impairment analysis in the fourth quarter of fiscal 2022, in conjunction with its budgeting and forecasting process for fiscal year 2023, and concluded that no indicators of impairment existed at any of its reporting units. As of June 30, 2022, the carrying value of goodwill was $933.8 million.
The Company completed its annual goodwill impairment analysis in the fourth quarter of fiscal 2023, in conjunction with its budgeting and forecasting process for fiscal year 2024 and concluded that no indicators of impairment existed at any of its reporting units. As of June 30, 2023, the carrying value of goodwill was $938.6 million.
We view operating free cash flow from continuing operations as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider operating free cash flow from continuing operations in isolation or as an alternative to financial measures determined in accordance with U.S.
We view Operating Free Cash Flows as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider Operating Free Cash Flows in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP.
Net Sales - Constant Currency Presentation We believe that this measure provides useful information to investors because it provides transparency to underlying performance in our consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility in foreign currency exchange markets.
Net Sales - Constant Currency Presentation We believe that net sales adjusted for the impact of foreign currency provides useful information to investors because it provides transparency to underlying performance in our consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on year-to-year comparability given the volatility in foreign currency exchange markets.
GAAP measure. These non-U.S. GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measure.
GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measures.
Selling, general and administrative expenses as a percentage of net sales was 15.9% in the twelve months ended June 30, 2022 compared to 15.3% in the prior year, attributable to the aforementioned items.
Selling, general and administrative expenses as a percentage of net sales was 16.1% in the twelve months ended June 30, 2023 compared to 15.9% in the prior year, as the reduction in net sales outpaced the reduction in selling, general and administrative expenses attributable to the aforementioned items.
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. Generally Accepted Accounting Principles (“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 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.
The increase resulted primarily from a higher outstanding debt balance driven primarily by the acquisition of THWR in the current fiscal year as well as share repurchase activity and an increase in interest rates. See N ote 10, Deb t and Borrowings , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
The increase resulted primarily from rising interest rates and a higher outstanding debt balance driven primarily by the acquisition of THWR and share repurchase activity during fiscal 2022. See Note 10, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. Dollar are translated into U.S.
To present net sales adjusted for the impact of foreign currency, current period net sales for entities reporting in currencies other than the U.S. Dollar are translated into U.S.
The change was attributable to the factors noted above as well as the year-over-year reduction in shares. Adjusted EBITDA Our consolidated Adjusted EBITDA was $200.6 million and $258.9 million for fiscal 2022 and 2021, respectively, as a result of the factors discussed above. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S.
Adjusted EBITDA Our consolidated Adjusted EBITDA was $166.6 million and $200.6 million for fiscal 2023 and 2022, respectively, as a result of the factors discussed above. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S.
GAAP financial measure “operating free cash flow from continuing operations.” The difference between operating free cash flow from continuing operations and cash flow provided by or used in operating activities from continuing operations, which is the most comparable U.S. GAAP financial measure, is that operating free cash flow from continuing operations reflects the impact of capital expenditures.
The difference between Operating Free Cash Flows and cash flows provided by or used in operating activities, which is the most comparable U.S. GAAP financial measure, is that Operating Free Cash Flows reflects the impact of purchases of property, plant and equipment (capital spending).
The fair values were based on significant management assumptions including an estimate of future cash flows. If assumptions are not achieved or market conditions decline, potential impairment charges could result. The Company will continue to monitor impairment indicators and financial results in future periods.
If assumptions are not achieved or market conditions decline, potential impairment charges could result. The Company will continue to monitor impairment indicators and financial results in future periods.
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 believes the non-U.S. GAAP measure provides useful information to investors and any additional purposes for which our management and Board of Directors uses 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.
For the fiscal 2022 impairment analysis, the Company performed the qualitative assessment for all of its reporting units with the exception of the United Kingdom and Europe 39 Table of Contents reporting units where a quantitative assessment was performed. The estimated fair value of each reporting unit exceeded its carrying value based on the analysis performed.
For the fiscal 2023 impairment analysis, the Company performed a quantitative assessment for its reporting units in the United Kingdom, US, Canada and Europe. The estimated fair value of each reporting unit exceeded its carrying value based on the analysis performed.
See also Note 8, Goodwill and Other Intangible Assets , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K, for additional information. Business Combinations During the year ended June 30, 2022, the Company completed the acquisition of THWR for total consideration of $260.4 million, net of cash acquired.
During the year ended June 30, 2023, the Company recorded aggregate non-cash impairment charges of $174.9 million related to certain trademarks and intangible assets as discussed in Note 8, Goodwill and Other Intangible Assets , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. 38 Table of Contents Business Combinations During the year ended June 30, 2022, the Company completed the acquisition of THWR for total consideration of $260.2 million, net of cash acquired.
Fiscal Year Ended June 30, (amounts in thousands) 2022 2021 Cash flows provided by (used in): Operating activities from continuing operations $ 80,241 $ 196,759 Investing activities from continuing operations (288,309) (2,364) Financing activities from continuing operations 212,787 (162,443) Increase in cash from continuing operations 4,719 31,952 Effect of exchange rate changes on cash (15,078) 6,148 Net (decrease) increase in cash and cash equivalents $ (10,359) $ 38,100 Cash provided by operating activities from continuing operations was $80.2 million for the fiscal year ended June 30, 2022, compared to $196.8 million in fiscal 2021.
Fiscal Year Ended June 30, (Amounts in thousands) 2023 2022 Cash flows provided by (used in): Operating activities $ 66,819 $ 80,241 Investing activities (19,640) (288,309) Financing activities (63,060) 212,787 Effect of exchange rate changes on cash 3,733 (15,078) Net decrease in cash and cash equivalents $ (12,148) $ (10,359) Cash provided by operating activities was $66.8 million for the fiscal year ended June 30, 2023, compared to $80.2 million in fiscal 2022.
The decrease was partially offset by an increase in the North America reportable segment due to the acquisition of THWR in the United States operating segment as well as an increase in Corporate and Other as a result of higher transaction costs incurred in fiscal year 2022 including costs related to the acquisition of THWR, advisory costs related to the divestiture by affiliates of Engaged Capital, LLC of their shares of the Company's common stock, as well as higher litigation expenses related to the baby food litigation described in Note 18, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
The decrease in Corporate and Other costs reflected a reduction in transaction costs, including costs in 2022 related to the acquisition of That's How We Roll (“THWR”) and advisory costs related to the divestiture by affiliates of Engaged Capital, LLC of their shares of the Company's common stock, as well as a reduction in litigation expenses related to the baby food litigation described in Note 17, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
See Note 7, Leases , and Note 10, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
Our contractual obligations primarily consist of long-term debt and related interest payments, purchase commitments and operating leases. See Note 7, Leases , and Note 10, Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
The effective income tax rate from continuing operations was 21.9% and 37.8% of pre-tax income for the twelve months ended June 30, 2022 and 2021, respectively.
The effective income tax rate was 10.9% and 21.9% of pre-tax income for year ended June 30, 2023 and 2022, respectively.
Contractual Obligations We are party to contractual obligations involving commitments to make payments to third parties, which impact our short-term and long-term liquidity and capital resource needs. Our contractual obligations primarily consist of long-term debt and related interest payments, purchase commitments and operating leases.
In addition to obligations under the Credit Agreement, we are party to other contractual obligations involving commitments to make payments to third parties, including purchase commitments and lease obligations, which impact our short-term and long-term liquidity and capital resource needs.
As of June 30, 2022, all of our investments were expected to mature in less than three months. 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 is summarized below.
As of June 30, 2023, substantially all cash was held outside of the United States. 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 is summarized below.
For the United Kingdom and Europe reporting units, the quantitative analysis was performed. Holding all other assumptions used in the 2022 fair value measurement constant, a 100-basis-point increase in the weighted average cost of capital would not result in the carrying value of the reporting units to be in excess of the fair value.
Holding all other assumptions used in the 2023 fair value measurement constant, a 100-basis-point increase in the weighted average cost of capital would not result in the carrying value of the reporting units to be in excess of the fair value. The fair values were based on significant management assumptions including an estimate of future cash flows.
The decrease was mainly due to the International reportable segment as a result of lower people-related expenses in the Europe and United Kingdom operating segments, partially offset by higher selling expenses in the Ella’s Kitchen UK operating segment.
The decrease primarily reflected reduced costs in Corporate and Other and the International reportable segment. The decrease in the International reportable segment was primarily a result of lower employee-related expenses in the Europe and the United Kingdom, partially offset by higher selling expenses in the United Kingdom.
International Net sales in the International reportable segment for fiscal 2022 were $728.7 million, a decrease of $137.5 million, or 15.9%, from net sales of $866.2 million in fiscal 2021 . On a constant currency basis, and adjusted for the impact of divestitures and discontinued brands, net sales decreased by 5.6% from fiscal 2021 .
North America Our net sales in the North America reportable segment for fiscal 2023 were $1.14 billion, a decrease of $24.0 million, or 2.1%, from net sales of $1.16 billion in fiscal 2022. On a constant currency basis, adjusted for the impact of acquisitions, divestitures and discontinued brands, net sales decreased by 3.8%.
Differences between estimated expense and actual promotion and incentive costs are recognized in earnings in the period such differences are determined. Actual expenses may differ if the level of redemption rates and performance were to vary from estimates.
Differences between estimated expense and actual promotion and incentive costs are recognized in earnings in the period such differences are determined.
On a constant currency basis, adjusted for the impact of acquisitions, divestitures and discontinued brands, net sales decreased approximately 0.4% from the prior comparable period. On an adjusted basis, net sales decreased in the International reportable segment, which was partially offset by an increase in the North America reportable segment.
On a constant currency basis, adjusted for the impact of acquisitions, divestitures and discontinued brands, net sales decreased approximately $51.1 million, or 2.7% from the prior comparable period. The decrease in net sales was primarily driven by the North America reportable segment. Further details of changes in adjusted net sales by segment are provided below in the Segment Results section.
Our working capital, which excludes assets held for sale, was $329.0 million at June 30, 2022, an increase of $44.2 million from $284.7 million at the end of fiscal 2021.
Our working capital was $358.9 million at June 30, 2023, an increase of $29.9 million from $329.0 million at the end of fiscal 2022.
GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net income to Adjusted EBITDA.
GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net income to Adjusted EBITDA. 30 Table of Contents Segment Results During the fourth quarter of 2023, we determined that our measure of segment profitability is Adjusted EBITDA of each reportable segment.
Interest and Other Financing Expense, Net 30 Table of Contents Interest and other financing expense , net totaled $12.6 million in fiscal 2022, an increase of $3.9 million, or 45.3%, from $8.7 million in the prior year.
Operating (Loss) Income Operating loss in fiscal 2023 was $85.6 million compared to operating income of $104.7 million in fiscal 2022 due to the items described above. Interest and Other Financing Expense, Net Interest and other financing expense, net totaled $45.8 million in fiscal 2023, an increase of $33.2 million, or 264.2%, from $12.6 million in the prior year.
Concluding that a valuation allowance is not required is difficult when there is significant negative evidence that is objective and verifiable, such as cumulative losses in recent years. We have deferred tax assets related to foreign net operating losses, primarily in the United Kingdom and to a lesser extent in Belgium, against which we have recorded valuation allowances.
Concluding that a valuation allowance is not required is difficult when there is significant negative evidence that is objective and verifiable, such as cumulative losses in recent years.
The decrease in the International reportable segment was mainly due to lower net sales in the United Kingdom and Europe operating segments, coupled with higher energy and supply chain costs when compared to the prior year, partially offset by higher net sales in the Ella's Kitchen UK operating segment.
The decrease in the International reportable segment gross profit was mainly due to higher energy and supply chain costs when compared to the prior year.
Valuation of Long-lived Assets Fixed assets and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable. Undiscounted cash flow analyses are used to determine if impairment exists. If impairment is determined to exist, the loss is calculated based on estimated fair value.
Actual expenses may differ if the level of redemption rates and performance were to vary from estimates. 37 Table of Contents Valuation of Long-lived Assets Fixed assets and amortizable intangible assets are reviewed for impairment as events or changes in circumstances occur indicating that the carrying value of the asset may not be recoverable.
GAAP results. 36 Table of Contents A reconciliation of net income (loss) to Adjusted EBITDA is as follows: Fiscal Year Ended June 30, (amounts in thousands) 2022 2021 Net income $ 77,873 $ 77,364 Net income from discontinued operations, net of tax — 11,255 Net income from continuing operations $ 77,873 $ 66,109 Depreciation and amortization 46,849 49,569 Equity in net loss of equity-method investees 2,902 1,591 Interest expense, net 10,226 5,880 Provision for income taxes 22,716 41,093 Stock-based compensation, net 15,611 15,659 Unrealized currency (gains) losses (2,259) 752 Litigation and related costs Litigation expenses 7,883 1,587 Proceeds from insurance claims (196) (592) Restructuring activities Plant closure related costs, net 929 58 Productivity and transformation costs 8,803 12,572 Warehouse/manufacturing consolidation and other costs 2,721 11,374 Acquisitions, divestitures and other Transaction and integration costs, net 14,055 3,291 Gain on sale of assets (9,049) (4,900) Gain on sale of businesses — (2,604) Impairment charges Inventory write-down (351) (421) Long-lived asset and intangible impairments 1,903 57,920 Adjusted EBITDA $ 200,616 $ 258,938 Operating Free Cash Flow from Continuing Operations In our internal evaluations, we use the non-U.S.
A reconciliation of net (loss) income to Adjusted EBITDA is as follows: Fiscal Year Ended June 30, (Amounts in thousands) 2023 2022 Net (loss) income $ (116,537) $ 77,873 Depreciation and amortization 50,777 46,849 Equity in net loss of equity-method investees 1,134 2,902 Interest expense, net 43,936 10,226 (Benefit) provision for income taxes (14,178) 22,716 Stock-based compensation, net 14,423 15,611 Unrealized currency losses (gains) 929 (2,259) Litigation and related costs (a) (1,369) 7,687 Restructuring activities CEO succession 5,113 — Plant closure related costs, net 94 929 Productivity and transformation costs 7,284 8,803 Warehouse/manufacturing consolidation and other costs, net 1,026 2,721 Acquisitions, divestitures and other Transaction and integration costs, net 2,018 14,055 Gain on sale of assets (3,529) (9,049) Impairment charges Inventory write-down — (351) Intangibles and long-lived asset impairment 175,501 1,903 Adjusted EBITDA $ 166,622 $ 200,616 (a) Expenses and items relating to securities class action and baby food litigation.
In addition, the International reportable segment incurred lower selling, general and administrative expenses for the reasons noted above. Corporate and Other Our Corporate and Other category consists of expenses related to the Company’s centralized administrative functions, which do not specifically relate to an operating segment.
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.
Overview The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993 and is headquartered in Lake Success, New York. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet.
Overview The Hain Celestial Group, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company,” and herein referred to as “Hain Celestial,” “we,” “us” and “our”), was founded in 1993. The Company is a leading manufacturer, marketer, and seller of better-for-you brands that inspire healthier living.
Compensation expense is recognized for only that portion of stock-based awards that are expected to vest. 40 Table of Contents Valuation Allowances for Deferred Tax Assets Deferred tax assets arise when we recognize expenses in our financial statements that will be allowed as income tax deductions in future periods.
For awards that contain a market condition, expense is recognized over the defined or derived service period using a Monte Carlo simulation model. Valuation Allowances for Deferred Tax Assets Deferred tax assets arise when we recognize expenses in our financial statements that will be allowed as income tax deductions in future periods.
Provision for Income Taxes The provision f or income taxes includes federal, foreign, state and local income taxes. Our income tax expense from continuing operations was $22.7 million and $41.1 million for fiscal 2022 and 2021, respectively.
The decrease was due to the items discussed above. (Benefit) Provision for Income Taxes The (benefit) provision for income taxes includes federal, foreign, state and local income taxes. Our income tax benefit was $14.2 million for fiscal 2023 compared to expense of $22.7 million for fiscal 2022.
See Note 10 , Debt and Borrowings , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. Amended and Restated Credit Agreement On December 22, 2021, the Company refinanced its revolving credit facility by entering into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).
Amended and Restated Credit Agreement On December 22, 2021, the Company refinanced its revolving credit facility by entering into a Fourth Amended and Restated Credit Agreement (as amended by a First Amendment dated December 16, 2022, the “Credit Agreement”).
Long-Lived Asset and Intangibles Impairment During fiscal 2022, the Company recorded an impairment of $1.6 million related to an indefinite-lived intangible asset as described in Note 8, Goodwill and Other Intangible Assets, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
See Note 8, Goodwill and Other Intangible Assets and Note 15, Fair Value Measurements , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
Net Income from Continuing Operations N et income fro m continuing operations for fiscal 2022 was $77.9 million compared to net income of $66.1 million for fiscal 2021. Net income per diluted share was $0.83 in fiscal 2022 compared to net income per diluted share of $0.65 in fiscal 2021.
Net (Loss) Income Net loss for fiscal 2023 was $116.5 million compared to net income of $77.9 million for fiscal 2022. Net loss per diluted share was $1.30 in fiscal 2023 compared to net income per diluted share $0.83 in 2022. The change was attributable to the factors noted above.
Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores in over 75 countries worldwide. The Company manufactures, markets, distributes and sells organic and natural products, providing consumers with the opportunity to lead A Healthier Way of Life ® .
The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes. Hain Celestial sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, drug and convenience stores worldwide.
Gross profit margin was 22.6% of net sales, compared to 25.0% in the prior year. The decrease in gross profit margin was due to both the North America and International reportable segments.
Gross Profit Gross profit in fiscal 2023 w as $396.4 million, a decrease of $31.0 million, or 7.3%, from gross profit of $427.4 million in fiscal 2022. Gross profit margin was 22.1% of net sales, compared to 22.6% in the prior year. The decrease in gross profit margin was primarily due to the International reportable segment.
GAAP Measures following the disc ussion of our results of operations for definitions and a reconciliation from our net cash provided by operat ing activities from continuing operations to operating free cash flow from continuing operations.
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 operating free cash flows. 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.
Income from Continuing Operations Before Income Taxes and Equity in Net Loss of Equity-Method Investees Income before income taxes and equity in the net loss of our equity-method investees for fiscal 2022 was $103.5 million compared to $108.8 million in fiscal 2021. The decrease was due to the items discussed above.
The decrease in income was primarily attributable to the recognition of an $8.7 million gain on sale of assets in the prior year related to the sale of undeveloped land plots in Boulder, Colorado. 29 Table of Contents (Loss) Income Before Income Taxes and Equity in Net Loss of Equity-Method Investees Loss before income taxes and equity in the net loss of our equity-method investees for fiscal 2023 was $129.6 million compared to income of $103.5 million in fiscal 2022.
Under current tax law in these jurisdictions, our carryforward losses have no expiration. During fiscal 2020, we recorded a valuation allowance against a majority of our state deferred tax assets and state net operating loss carryforwards as it was not more likely than not that the state tax attributes will be realized.
We have deferred tax assets related to foreign net operating losses, primarily in the United Kingdom and to a lesser extent in Belgium, against which we have recorded valuation allowances. Under current tax law in these jurisdictions, our carryforward losses have no expiration.
Other Income, Net Other income, net totaled $11.4 million in fiscal 2022, an increase of $1.3 million from $10.1 million in the prior year. The change was primarily attributable to a higher gain on sale of assets in the current year than in the prior year.
Other Income, Net Other income, net totaled $1.8 million in fiscal 2023, a decrease of $9.6 million from $11.4 million in the prior year.
GAAP. 37 Table of Contents A reconciliation from net cash provided by operating activities to operating free cash flow is as follows: Fiscal Year Ended June 30, (amounts in thousands) 2022 2021 Net cash provided by operating activities $ 80,241 $ 196,759 Purchases of property, plant and equipment (39,965) (71,553) Operating free cash flow $ 40,276 $ 125,206 As of June 30, 2022, we had non-current unrecognized tax benefits of $21.9 million for which we are not able to reasonably estimate the timing of future cash flows.
A reconciliation from cash flows provided by operating activities to Operating Free Cash Flows is as follows: Fiscal Year Ended June 30, (Amounts in thousands) 2023 2022 Net cash provided by operating activities $ 66,819 $ 80,241 Purchases of property, plant and equipment (27,879) (39,965) Operating free cash flows $ 38,940 $ 40,276 Contractual Obligations We are party to contractual obligations involving commitments to make payments to third parties, which impact our short-term and long-term liquidity and capital resource needs.
The Company's management believes that excluding the impact of acquisitions, divestitures and discontinued brands when presenting period-over-period results of net sales aids in comparability. 35 Table of Contents A reconciliation between reported and adjusted net sales increase (decrease) in f iscal 2022 is as follows: (amounts in thousands) North America International Hain Consolidated Net sales - Twelve months ended 6/30/22 $ 1,163,132 $ 728,661 $ 1,891,793 Acquisitions, divestitures and discontinued brands (55,393) — (55,393) Impact of foreign currency exchange (1,454) 17,318 15,864 Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands - Twelve months ended 6/30/22 $ 1,106,285 $ 745,979 $ 1,852,264 Net sales - Twelve months ended 6/30/21 $ 1,104,128 $ 866,174 $ 1,970,302 Divestitures and discontinued brands (35,314) (75,543) (110,857) Net sales adjusted for divestitures and discontinued brands - Twelve months ended 6/30/21 $ 1,068,814 $ 790,631 $ 1,859,445 Net sales increase (decrease) 5.3 % (15.9) % (4.0) % Impact of acquisitions, divestitures and discontinued brands (1.7) % 8.3 % 2.8 % Impact of foreign currency exchange (0.1) % 2.0 % 0.8 % Net sales increase (decrease) on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands 3.5 % (5.6) % (0.4) % Adjusted EBITDA Adjusted EBITDA is defined as net income (loss) before income taxes, net interest expense, depreciation and amortization, impairment of long-lived and intangible assets, equity in the earnings of equity-method investees, stock-based compensation, productivity and transformation costs, and other non-recurring items such as litigation related to a specific non-recurring matter.
To present net sales adjusted for the impact of divestitures and discontinued brands, the net sales of a divested business or discontinued brand are excluded from all periods. 34 Table of Contents A reconciliation between reported net sales and net sales adjusted for the impact of foreign currency, acquisitions, divestitures and discontinued brands is as follows: (Amounts in thousands) North America International Hain Consolidated Net sales - Twelve months ended 6/30/23 $ 1,139,162 $ 657,481 $ 1,796,643 Acquisitions, divestitures and discontinued brands (34,659) — (34,659) Impact of foreign currency exchange 6,560 64,053 70,613 Net sales on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands - Twelve months ended 6/30/23 $ 1,111,063 $ 721,534 $ 1,832,597 Net sales - Twelve months ended 6/30/22 $ 1,163,132 $ 728,661 $ 1,891,793 Acquisitions, divestitures and discontinued brands (8,109) — (8,109) Net sales adjusted for divestitures and discontinued brands - Twelve months ended 6/30/22 $ 1,155,023 $ 728,661 $ 1,883,684 Net sales decline (2.1) % (9.8) % (5.0) % Impact of acquisitions, divestitures and discontinued brands (2.3) % — % (1.4) % Impact of foreign currency exchange 0.6 % 8.8 % 3.7 % Net sales decline on a constant currency basis adjusted for acquisitions, divestitures and discontinued brands (3.8) % (1.0) % (2.7) % Adjusted EBITDA The Company defines Adjusted EBITDA as net (loss) income 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), certain litigation and related costs, CEO succession costs, plant closure related costs-net, productivity and transformation costs, warehouse and manufacturing consolidation and other costs, costs associated with acquisitions, divestitures and other transactions, gains on sales of assets, certain inventory write-downs, intangibles and long-lived asset impairment and other adjustments.
See Note 4, Acquisitions and Dispositions, in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details. Discontinued Operations 28 Table of Contents On August 27, 2019, the Company and Ebro Foods S.A.
GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations and Note 19, Segment Information , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for a reconciliation of segment Adjusted EBITDA.
Operating Free Cash Flow from Continuing Operations Our operating free cash flow was $40.3 million for fiscal 2022, a decrease of $84.9 million from fiscal 2021.
Operating Free Cash Flows Our operating free cash flow was $38.9 million for fiscal 2023, a decrease of $1.3 million from fiscal 2022. The decrease in operating free cash flow primarily resulted a decrease in cash flow from operations of $13.4 million driven by the reasons explained above, partially offset by reduction in capital expenditures. See the Reconciliation of Non-U.S.
Amortization of Acquired Intangibles Amortization of acquired intangibles was $10.2 million in fiscal 2022, an increase of $1.3 million, or 14.4%, from $8.9 million in fiscal 2021 due to the acquisition of THWR in the current fiscal year, partially offset by lower amortization expense in the current year as a result of prior year dispositions that occurred in the latter part of fiscal 2021.
Amortization of Acquired Intangible Assets Amortization of acquired intangible assets was $10.0 million in fiscal 2023, a decrease of $0.2 million, or 1.9%, from $10.2 million in fiscal 2022, primarily reflecting reduced amortization expenses due to impairment of the ParmCrisps customer relationships recognized in the third quarter of 2023 (see Note 8, Goodwill and Other Intangible Assets , in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K), partially offset by an increase in amortization expenses associated with the acquisition of THWR in the second quarter of the prior fiscal year.
The decrease in cash provided by operating activities in fiscal 2022 compared to fiscal 2021 resulted primarily from a reduction of $49.6 million in net income adjusted for non-cash charges in the current year and lower cash generation of $66.9 million from our working capital accounts which was mainly due to a refund of $53.8 million received by the Company in the prior year from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").
The decrease in cash provided from operating activities resulted from a $49.4 million reduction in net income adjusted for non-cash charges offset by a $36.0 million reduction in cash used for working capital.
On a constant currency basis, adjusted for the impact of acquisitions, divestitures and discontinued brands, net sales increased by 3.5%. The increase of 3.5% was mainly due to price increases that occurred in the latter half of the fiscal year as well as stronger sales in snacks, baby, personal care and other product categories in the United States operating segment.
The decrease in net sales was mainly due to lower sales in personal care and tea. Adjusted EBITDA in fiscal 2023 was $123.4 million, an increase of $1.2 million from $122.2 million in fiscal 2022. Fiscal 2023 Adjusted EBITDA on a constant currency basis increased 1.5% from the prior year.
Productivity and Transformation Costs Productivity and transformation costs were $10.2 million in fiscal 2022, a decrease of $5.4 million or 34.8% from $15.6 million in fiscal 2021. The decrease was d ue to reduced spending related to productivity and transformation initiatives as the current transformation effort approaches its conclusion.
Productivity and Transformation Costs Productivity and transformation costs were $7.3 million in fiscal 2023, a decrease of $2.9 million or 28.4% from $10.2 million in fiscal 2022. The decrease was primarily due to the wind down of prior year restructuring costs partially offset by new spending on our strategic plan update.
Segment Results The following table provides a summary of net sales and operating income (loss) by reportable segment for the fiscal years ended June 30, 2022 and 2021: (dollars in thousands) North America International Corporate and Other Consolidated Fiscal 2022 net sales $ 1,163,132 $ 728,661 $ — $ 1,891,793 Fiscal 2021 net sales $ 1,104,128 $ 866,174 $ — $ 1,970,302 $ change $ 59,004 $ (137,513) n/a $ (78,509) % change 5.3 % (15.9) % n/a (4.0) % Fiscal 2022 operating income (loss) $ 93,732 $ 79,076 $ (68,127) $ 104,681 Fiscal 2021 operating income (loss) $ 129,010 $ 38,036 $ (59,666) $ 107,380 $ change $ (35,278) $ 41,040 $ (8,461) $ (2,699) % change (27.3) % 107.9 % (14.2) % (2.5) % Fiscal 2022 operating income margin 8.1 % 10.9 % n/a 5.5 % Fiscal 2021 operating income margin 11.7 % 4.4 % n/a 5.4 % North America Our net sales in the North America reportable segment for fiscal 2022 were $1.16 billion, an increase of $59.0 million, or 5.3%, from net sales of $1.10 billion in fiscal 2021.
The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the fiscal years ended June 30, 2023 and 2022: (Amounts in thousands) North America International Corporate and Other Consolidated Fiscal 2023 net sales $ 1,139,162 $ 657,481 $ — $ 1,796,643 Fiscal 2022 net sales $ 1,163,132 $ 728,661 $ — $ 1,891,793 $ change $ (23,970) $ (71,180) n/a $ (95,150) % change (2.1) % (9.8) % n/a (5.0) % Fiscal 2023 Adjusted EBITDA $ 123,443 $ 82,945 $ (39,766) $ 166,622 Fiscal 2022 Adjusted EBITDA $ 122,235 $ 110,073 $ (31,692) $ 200,616 $ change $ 1,208 $ (27,128) $ (8,074) $ (33,994) % change 1.0 % (24.6) % (25.5) % (16.9) % Fiscal 2023 Adjusted EBITDA margin 10.8 % 12.6 % n/a 9.3 % Fiscal 2022 Adjusted EBITDA margin 10.5 % 15.1 % n/a 10.6 % See the Reconciliation of Non-U.S.
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The Company continues to be a leading marketer, manufa cturer and seller of organic and natural, “better-for-you” products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. The Company is committed to growing sustainably while continuing to implement environmentally sound business practices and manufacturing processes.
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Global Economic Environment Economic conditions during fiscal year 2022 and fiscal year 2023 have been marked by inflationary pressures, rising interest rates and shifts in consumer demand. • Inflation – The inflationary environment has led to higher costs for ingredients, packaging, energy, transportation and other supply chain components.
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Our previous strategy, which we refer to as Hain 2.0, was executed under four key pillars—(1) simplify our portfolio; (2) strengthen our capabilities; (3) expand profit margins and cash flow; and (4) reinvigorate profitable topline growth.
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We expect this higher than normal cost environment to continue, although we expect these higher costs to be partially mitigated by pricing actions we have implemented to date and further pricing actions that we may implement. • Interest Rates – Loans under our credit agreement bear interest at a variable rate, and the interest rate on our outstanding indebtedness has increased as market interest rates have risen significantly starting in the second half of fiscal year 2022.
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This strategy has laid the foundation for Hain 3.0, our vision and strategy for the next several years, which is about building a global healthy food and beverage company with industry-leading top line growth.
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These higher interest rates, together with a higher outstanding debt balance, have led to an increase in our interest expense, and we expect this high rate environment to continue. • Consumer Demand – Recent economic conditions have resulted in changes in consumer spending patterns, which have adversely impacted our sales.
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We believe Hain 3.0 positions us as an advantaged and differentiated company, as compared to others in the food industry, for several reasons: • we are primarily focused on health and wellness, • we are a global company in high-growth categories with opportunities for expansion in existing and new channels and geographies, • we have unique and advantaged brands with strong points of difference, and • given our size, small wins can drive material incremental growth.
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During an economic downturn, factors such as increased unemployment, decreases in disposable income and declines in consumer confidence can cause changes in consumer spending behavior.
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We have re-segmented the brand portfolio with a more global view to where we have the most growth potential.
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In particular, economic conditions have prompted some consumers, particularly in Europe, to shift to lower-priced products. 26 Table of Contents CEO Succession On November 22, 2022, the Board of Directors (the “Board”) of the Company approved a succession plan pursuant to which the Board appointed Wendy P.
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As a result, we have migrated from a strategy focused on rejuvenating North America behind a construct of “Get Bigger" and "Get Better” brand categories to one that focuses on growing global brands in categories where we think we have the most potential.
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Davidson to the role of President and Chief Executive Officer and as a director on the Board, in each case effective as of January 1, 2023. As part of the succession plan, Mark L. Schiller transitioned from his position as President and Chief Executive Officer of the Company effective as of December 31, 2022 (the “Transition Date”). Mr.
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The categories we have identified are called Turbocharge, Targeted Investment, and Fuel: • The Turbocharge brands are leading-share brands in what we believe to be very high-growth categories. The Turbocharge brands are made up of snacks as well as plant-based meat and non-dairy beverages.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAssuming current cash equivalents, variable rate borrowings and the effects of the interest rate swaps, a hypothetical change in average interest rates of one percentage point would have no impact to net interest expense. 41 Table of Contents Foreign Currency Exchange Rates Operating in international markets involves exposure to movements in currency exchange rates, which are volatile at times, and the impact of such movements, if material, could cause adjustments to our financing and operating strategies.
Biggest changeForeign Currency Exchange Rates Operating in international markets involves exposure to movements in currency exchange rates, which are volatile at times, and the impact of such movements, if material, could cause adjustments to our financing and operating strategies.
We had approximately $131.8 million in notional amounts of cross-currency swaps and foreign currency exchange contracts at June 30, 2022. See Note 16, Derivatives and Hedging Activities , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
We had approximately $131.8 million in notional amounts of cross-currency swaps and foreign currency exchange contracts at June 30, 2023. See Note 16, Derivatives and Hedging Activities , in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
These agreements are tied to specific market prices. Market risk is estimated as a hypothetical 10% increase or decrease in the weighted average cost of our primary inputs as of June 30, 2022.
These agreements are tied to specific market prices. Market risk is estimated as a hypothetical 10% increase or decrease in the weighted average cost of our primary inputs as of June 30, 2023.
Interest Rates We centrally manage our debt and cash equivalents, considering investment opportunities and risks, tax consequences and overall financing strategies. Our cash equivalents consist primarily of money market funds or their equivalent. As of June 30, 2022, we had $889 million of variable rate debt outstanding under our Credit Agreement.
Interest Rates We centrally manage our debt and cash equivalents, considering investment opportunities and risks, tax consequences and overall financing strategies. Our cash equivalents consist primarily of money market funds or their equivalent. As of June 30, 2023, we had $830 million of variable rate debt outstanding under our Credit Agreement.
The cumulative translation adjustments component of Accumulated Other Comprehensive Loss decreased by $102.1 million during the fiscal year ended June 30, 2022. To reduce that risk, the Company ma y enter into certain derivative financial instruments, when available on a cost-effective basis, to manage such risk.
The cumulative translation adjustments component of Accumulated Other Comprehensive Loss decreased by $30.2 million during the fiscal year ended June 30, 2023. To reduce that risk, the Company ma y enter into certain derivative financial instruments, when available on a cost-effective basis, to manage such risk.
During fiscal 2022, approximately 45% of our consolidated net sales were generated from sales outside the United States, while such sales outside the United States were 52% of net sales in fiscal 2021 and 51% of net sales in fiscal 2020.
During fiscal 2023, approximately 43% of our consolidated net sales were generated from sales outside the United States, while such sales outside the United States were 45% of net sales in fiscal 2022 and 52% of net sales in fiscal 2021.
These revenues, along with related expenses and capital purchases, were conducted primar ily in British Pounds Sterling, Euros and Canadian Dollars. Sales and operating income would have decreased by approximatel y $42.3 million and $4.2 million, respectiv ely, if average foreign exchange rates had been lower by 5% against the U.S. Dollar in fiscal 2022.
These revenues, along with related expenses and capital purchases, were conducted primar ily in British Pounds Sterling, Euros and Canadian Dollars. Sales and operating income would have decreased by approximatel y $39.4 million and $2.8 million, resp ectiv ely, if average foreign exchange rates had been lower by 5% against the U.S. Dollar in fiscal 2023.
Based on our cost of goods sold duri ng the fiscal year ended June 30, 2022, such a change would have resulted in an increase or decrease to cost of sales of approximately $101 million. W e attempt to offset the impact of input cost increases with a combination of cost savings initiatives and efficiencies and price increases.
Based on our cost of goods sold duri ng the fiscal year ended June 30, 2023, such a change would have resulted in an increase or decrease to cost of sales of approximately $106 million.
During fiscal 2021, the Company used interest rate swaps to hedge a portion of the interest rate risk related its outstanding variable rate debt. As of June 30, 2022, the notional amount of the interest rate swaps was $630 million. Of this amount, $230 million has a weighted average fixed rate of 1.77% with a maturity date in February 2023.
During fiscal 2021, the Company used interest rate swaps to hedge a portion of the interest rate risk related its outstanding variable rate debt. As of June 30, 2023, the notional amount of the interest rate swaps was $400 million with fixed rate payments of 5.10% that started from February 2023.
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The remaining amount of $400 million relates to derivatives for which fixed rate payments of 4.85% w ill start from February 2023.
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Assuming current cash equivalents, variable rate borrowings and the effects of the interest rate swaps, a hypothetical change in average interest rates of one percentage point would have resulted in higher net interest expense of $5.5 million.
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W e attempt to offset the impact of input cost increases with a combination of cost savings initiatives and efficiencies and price increases. 40 Table of Contents

Other HAIN 10-K year-over-year comparisons