# HAIN CELESTIAL GROUP INC (HAIN) FY 2026 MD&A

Verbatim Item 7 Management's Discussion and Analysis from HAIN CELESTIAL GROUP INC's 10-K for fiscal year 2026.

SEC filing source: https://www.sec.gov/Archives/edgar/data/910406/000119312526390505/hain-20260630.htm
Accession: 0001193125-26-390505
Filing date: 2026-09-14
Report date: 2026-06-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/HAIN/
All MD&A years: /company/HAIN/mda/
Previous year: /company/HAIN/mda/fy2025/ (FY 2025)

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, 2026 included in Item 8 of this Form 10-K. 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 2026 and fiscal 2025 items and year-to-year comparisons between fiscal 2026 and fiscal 2025. Discussions of fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024 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, 2025, which was filed with the SEC on September 15, 2025 and is available on the SEC’s website at www.sec.gov.

Overview

The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993. Hain Celestial is a leading global health and wellness company whose purpose is to inspire healthier living for people, communities and the planet through better-for-you brands. For more than 30 years, Hain Celestial has intentionally focused on delivering nutrition and well-being that positively impacts today and tomorrow. Headquartered in Hoboken, N.J., Hain Celestial’s products across beverages, yogurt, baby/kids and meal preparation are marketed and sold in over 70 countries around the world. The Company operates under two reportable segments: North America and International.

The Company’s leading brands include Celestial Seasonings® teas, The Greek Gods® yogurt, Earth’s Best® Organic and Ella’s Kitchen® baby and kids foods, Joya® and Natumi® plant-based beverages, Hartley’s® jelly, as well as Cully & Sully®, Yorkshire Provender®, and New Covent Garden® soups, among others.

Strategic Review

During the fourth quarter of fiscal year 2025, we announced that our Board of Directors was conducting a comprehensive review of the Company’s portfolio with the assistance of our independent financial advisor.

North American Snacks Transaction

As part of this review, on February 27, 2026, the Company completed the sale (the “North American Snacks Transaction”) of its North American Snacks business, including Garden Veggie Snacks™, Terra® chips and Garden of Eatin’® snacks as well as certain private label products (the “North American Snacks Business”) and received $111.2 million in cash, reflecting the total purchase price of $115.0 million less the holdback of an estimate for a customary inventory adjustment, which was finalized following the closing. The Company used the net proceeds of $101.1 from the North American Snacks Transaction to reduce the Company’s indebtedness.

International Business Transaction

As an additional step in the strategic review, on September 12, 2026, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with entities (the “Purchasers”) affiliated with global private equity firm AURELIUS pursuant to which, subject to the terms and conditions set forth therein, the Purchasers have agreed to acquire from the Company (the “International Business Transaction”) the entities that operate Hain Celestial’s International business in the United Kingdom, Ireland and Europe, including Ella’s Kitchen® baby and kids foods, Joya® and Natumi® plant-based beverages, Hartley’s® jelly, as well as Cully & Sully®, Yorkshire Provender®, and New Covent Garden® soups.

The aggregate net cash proceeds to be realized, after transaction expenses and taxes and including cash to be distributed from the International Business prior to closing, are expected to be between £225.1 million and £228.8 million, or between approximately $305.0 million and $310.0 million. Upon closing of the International Business Transaction, the Company would use the net proceeds to reduce the Company’s indebtedness. The foregoing U.S. Dollar figures are based on current foreign exchange rates and are subject to change based on foreign exchange rates in effect at the time the International Business Transaction closes.

Consummation of the International Business Transaction is subject to regulatory approvals and the Company and its lenders entering into an amendment of the Company’s credit agreement, which currently has a maturity date of December 22, 2026, to extend such maturity date by not less than nine months. If the credit agreement amendment is not entered into by October 12, 2026, the Purchasers may terminate the Purchase Agreement.

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The Company remains in active discussions with its lenders to reach an agreement on an amendment of the Company’s credit agreement that would satisfy the closing condition for the International Business Transaction. While there can be no assurance that a credit agreement amendment will be obtained, the Company’s Board of Directors believes that extending the maturity date and completing the International Business Transaction would be in the best interests of the Company and its stakeholders.

See Note 1, Description of the Business and Basis of Presentation, under the heading “Strategic Review—International Business Transaction” in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Restructuring Program

During the first quarter of fiscal year 2024, the Company began a multi‑year restructuring program (the “Restructuring Program”) to improve profitability and support future growth. Cumulative pretax charges associated with the Restructuring Program are expected to be $135 million - $145 million, which represents an increase of $20 million from the previously reported range, primarily due to incremental restructuring actions expected to be incurred in connection with the International Business Transaction. Substantially all of the incremental $20 million in charges are expected to be cash charges, with approximately 70% of the charges expected to be incurred in fiscal year 2027 and the remaining 30% expected to be incurred in fiscal year 2028. Annualized pretax savings from this incremental portion of the Restructuring Program are expected to be approximately $16 million. As a result, the Restructuring Program is expected to conclude by fiscal year 2028, instead of the previously communicated completion date of fiscal year 2027. See Note 1, Description of the Business and Basis of Presentation, under the heading “Strategic Review—International Business Transaction” in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

During the fiscal year 2026 we incurred charges totaling $27.3 million associated with actions under the restructuring program, including employee-related costs, contract termination costs, asset write-downs, and other transformation-related expenses. To date, we incurred $113.3 million of restructuring charges, of these charges, $35.3 million were non-cash.

Global Economic Environment

Macroeconomic conditions continue to reflect inflation volatility, changes in interest rates, evolving fiscal and monetary policies, global supply chain challenges, and changes in U.S. and international trade restrictions and tariffs. In addition, ongoing geopolitical tensions, including the conflict involving Iran that began in February 2026, have contributed to volatility in energy and commodity markets and increased uncertainty across the global economy.

These conditions have affected, and may continue to affect, fuel, transportation, logistics, and other input costs, as well as consumer spending patterns in certain markets. While the Company has not experienced a material disruption to its operations as a result of these developments, prolonged or escalating geopolitical and macroeconomic pressures could adversely impact costs, supply chain efficiency, demand trends, liquidity, and operating results. The Company continues to monitor the evolving macroeconomic and geopolitical environment and, where appropriate, implement measures to mitigate potential impacts on its business.

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Results of Operations

Comparison of Fiscal Year Ended June 30, 2026 to Fiscal Year Ended June 30, 2025

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, 2026 and 2025 (dollars in thousands, other than per share amounts and percentages, which may not add due to rounding):

[[GREPCENT_TABLE]]
[["","","Fiscal Year Ended June 30,","","","Change in"],["","","2026","","","2025","","","Dollars","","","Percentage"],["Net sales","","$","1,353,429","","","","100.0","%","","$","1,559,780","","","","100.0","%","","$","(206,351",")","","","(13.2",")%"],["Cost of sales","","","1,081,317","","","","79.9","%","","","1,225,722","","","","78.6","%","","","(144,405",")","","","(11.8",")%"],["Gross profit","","","272,112","","","","20.1","%","","","334,058","","","","21.4","%","","","(61,946",")","","","(18.5",")%"],["Selling, general and administrative expenses","","","248,039","","","","18.3","%","","","271,833","","","","17.4","%","","","(23,794",")","","","(8.8",")%"],["Goodwill impairment","","","193,219","","","","14.3","%","","","428,882","","","","27.5","%","","","(235,663",")","","","(54.9",")%"],["Long-lived asset and intangibles impairment","","","27,394","","","","2.0","%","","","66,940","","","","4.3","%","","","(39,546",")","","","(59.1",")%"],["Productivity and transformation costs","","","22,039","","","","1.6","%","","","21,530","","","","1.4","%","","","509","","","","2.4","%"],["Amortization of acquired intangible assets","","","10,802","","","","0.8","%","","","6,476","","","","0.4","%","","","4,326","","","","66.8","%"],["Proceeds from insurance claim","","","(25,900",")","","","(1.9",")%","","","\u2014","","","","0.0","%","","","(25,900",")","","**"],["Operating loss","","","(203,481",")","","","(15.0",")%","","","(461,603",")","","","(29.6",")%","","","258,122","","","","(55.9",")%"],["Interest and other financing expense, net","","","56,957","","","","4.2","%","","","51,253","","","","3.3","%","","","5,704","","","","11.1","%"],["Other expense, net","","","46,342","","","","3.4","%","","","875","","","","0.1","%","","","45,467","","","**"],["Loss before income taxes and equity in net loss of equity-method investees","","","(306,780",")","","","(22.7",")%","","","(513,731",")","","","(32.9",")%","","","206,951","","","","(40.3",")%"],["(Benefit) provision for income taxes","","","(2,208",")","","","(0.2",")%","","","15,297","","","","1.0","%","","","(17,505",")","","*"],["Equity in net loss of equity-method investees","","","351","","","","0.0","%","","","1,813","","","","0.1","%","","","(1,462",")","","","(80.6",")%"],["Net loss","","$","(304,923",")","","","(22.5",")%","","$","(530,841",")","","","(34.0",")%","","$","225,918","","","","(42.6",")%"],["Adjusted EBITDA","","$","89,008","","","","6.6","%","","$","113,789","","","","7.3","%","","$","(24,781",")","","","(21.8",")%"],["Basic and diluted net loss per common share","","$","(3.36",")","","","","","$","(5.89",")","","","","","$","2.53","","","","(43.0",")%"]]
[[/GREPCENT_TABLE]]

* Percentage is not meaningful due to one or more amounts being negative.

** Percentage is not meaningful due to significantly lower number or nil value in the comparative period.

Net Sales

Net sales in fiscal 2026 were $1.35 billion, a decrease of $206.4 million, or 13.2%, from net sales of $1.56 billion in fiscal 2025, primarily due to a decline in the North America reportable segment. Results for fiscal 2026 included an unfavorable impact of $208.2 million, or 12.6%, related to divestitures, held for sale businesses, discontinued brands and exited product categories and a favorable impact of $29.6 million, or 1.9%, from foreign exchange, as compared to the prior year. Organic net sales, defined as net sales adjusted to exclude the impact of acquisitions, divestitures, held for sale businesses, discontinued brands, exited product categories and foreign exchange, decreased $27.8 million, or 2.5%, from the prior year. The decrease in organic net sales was primarily due to decline in the International reportable segment, partially offset by growth in the North America reportable segment. Additionally, the decrease in organic net sales was comprised of a 3.2% decrease in volume/mix, partially offset by a 0.7% increase in price. Further details of changes in net sales by segment are provided below in the Segment Results section.

Gross Profit

Gross profit in fiscal 2026 was $272.1 million, a decrease of $61.9 million, or 18.5%, from $334.1 million in fiscal 2025. Gross profit margin decreased to 20.1% from 21.4%, a decline of 130 basis points, primarily due to weaker performance in the

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International segment. While North America gross profit declined because of lower sales volume, including the impact of the North American Snacks Transaction, and an unfavorable product mix, these impacts were more than offset by pricing actions and trade efficiencies, resulting in a 120-basis-point improvement in North America gross margin to 22.9%. In contrast, the International segment experienced lower gross profit due to cost inflation and reduced sales volume, partially offset by productivity savings, which drove the overall decline in consolidated gross margin.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $248.0 million in fiscal 2026, a decrease of $23.8 million, or 8.8%, from $271.8 million in fiscal 2025. The decrease was primarily due to a reduction in SG&A associated with the disposition of the North American Snacks Business in February 2026 and continued overhead reduction actions.

Goodwill Impairment

During the fiscal year ended June 30, 2026, the Company recognized aggregate non-cash goodwill impairment charges of $193.2 million related to its U.S., U.K., and Western Europe reporting units. During the fiscal year ended June 30, 2025, the Company recorded aggregate non-cash goodwill impairment charges of $357.7 million within the North America segment related to its U.S. and Canada reporting units and $71.2 million within the International segment related to its U.K. reporting unit. See Note 9, Goodwill and Other Intangible Assets, and Note 15, Fair Value Measurements, in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Long-Lived Asset and Intangibles Impairment

During the fiscal year ended June 30, 2026, the Company recognized aggregate non-cash impairment charges of $27.4 million, including (i) $14.6 million related to Hartley’s® jelly, Spectrum® culinary oils, and Earth’s Best® Organic tradenames and (ii) a $11.2 million charge primarily related to the personal care assets held for sale. See Note 4, Assets and Liabilities Held for Sale, Note 9, 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.

During the fiscal year ended June 30, 2025, the Company recognized aggregate non-cash impairment charges of $66.9 million, including (i) $37.8 million related to Sensible Portions®, Belvedere™, Imagine®, Health Valley®, and certain North America personal care intangible assets (Avalon Organics® and JASON®) and (ii) a $26.8 million charge primarily related to the personal care assets held for sale. See Note 4, Assets and Liabilities Held for Sale, and Note 9, Goodwill and Other Intangible Assets, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Productivity and Transformation Costs

Productivity and transformation costs remained relatively flat at $22.0 million in fiscal 2026, compared to $21.5 million in fiscal 2025.

Productivity and transformation costs of $22.0 million in fiscal 2026 were primarily comprised of consultancy and employee-related costs in the amount of $10.6 million and $10.9 million, respectively. See Note 18, Restructuring Program, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Amortization of Acquired Intangible Assets

Amortization of acquired intangibles was $10.8 million in fiscal 2026, an increase of $4.3 million, or 66.8%, from $6.5 million in fiscal 2025. Effective April 1, 2026, as part of its annual impairment testing and in connection with the ongoing strategic review and business strategy to focus on simplifying the organization and its portfolio, the Company changed the estimated useful life of its remaining intangible assets from indefinite to definite.

Operating Loss

Operating loss in fiscal 2026 was $203.5 million compared to $461.6 million in fiscal 2025 due to the items described above.

Interest and Other Financing Expense, Net

Interest and other financing expense, net totaled $57.0 million in fiscal 2026, an increase of $5.7 million, or 11.1%, from $51.3 million in the prior year. The increase resulted primarily from a higher interest rate spread as well as increased amortization of deferred financing fees related to the May 2025 and September 2025 amendments to our Credit Agreement, as defined below, partially offset by lower outstanding debt balance compared to the prior year period. See Note 11, Debt and Borrowings, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

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Other Expense, Net

Other expense, net was $46.3 million in fiscal 2026, compared to $0.9 million in the prior year. The change was primarily due to the recognition of a pretax loss of $50.8 million on the sale of North American Snacks Business in fiscal 2026. See Note 5, Dispositions, in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

Loss 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 2026 was $306.8 million compared to $513.7 million in fiscal 2025. 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 $2.2 million for fiscal 2026 compared to an expense of $15.3 million for fiscal 2025. Income tax in fiscal 2026 reflected current tax on operations in certain jurisdictions and an increase in the accrual for uncertain tax positions. We did not record income tax benefits for losses incurred in certain jurisdictions, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our inability to carry forward or carry back tax losses or credits.

The effective income tax rate was a benefit of 0.7% and an expense of 3.0% for the fiscal year ended June 30, 2026 and 2025, respectively. The effective income tax rate for the year ended June 30, 2026 was primarily impacted by the recognition of a valuation allowance as a result of the reduction in deferred tax liabilities due to the above-noted impairment charges on intangible assets.

The effective income tax rate for the year ended June 30, 2025 was primarily impacted by the recognition of a valuation allowance against deferred tax assets as a result of the reduction in deferred tax liabilities due to the above-noted impairment charges on intangible assets and recognition of uncertain tax positions.

Our effective tax rate may change from period-to-period based on recurring and nonrecurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

See Note 12, Income Taxes, in the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information.

Equity in Net Loss of Equity-Method Investees

Our equity in the net loss from our equity method investments for fiscal 2026 was a loss of $0.4 million compared to a $1.8 million loss for fiscal 2025.

Net Loss

Net loss for fiscal 2026 was $304.9 million, or $3.36 per diluted share, compared to $530.8 million, or $5.89 per diluted share, in fiscal 2025. The change was attributable to the factors noted above.

Adjusted EBITDA

Our consolidated Adjusted EBITDA was $89.0 million and $113.8 million for fiscal 2026 and 2025, respectively, as a result of the factors discussed above. See Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations for definitions and a reconciliation of our net loss to Adjusted EBITDA.

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Segment Results

The following table provides a summary of net sales and Adjusted EBITDA by reportable segment for the fiscal years ended June 30, 2026 and 2025:

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","North America","","","International","","","Corporate and Other","","","Consolidated"],["Net Sales"],["Fiscal 2026","","$","685,053","","","$","668,376","","","$","\u2014","","","$","1,353,429"],["Fiscal 2025","","$","888,626","","","$","671,154","","","$","\u2014","","","$","1,559,780"],["$ change","","$","(203,573",")","","$","(2,778",")","","n/a","","","$","(206,351",")"],["% change","","","(22.9",")%","","","(0.4",")%","","n/a","","","","(13.2",")%"],["Adjusted EBITDA"],["Fiscal 2026","","$","61,236","","","$","63,458","","","$","(35,686",")","","$","89,008"],["Fiscal 2025","","$","65,470","","","$","86,000","","","$","(37,681",")","","$","113,789"],["$ change","","$","(4,234",")","","$","(22,542",")","","$","1,995","","","$","(24,781",")"],["% change","","","(6.5",")%","","","(26.2",")%","","","5.3","%","","","(21.8",")%"],["Adjusted EBITDA margin"],["Fiscal 2026","","","8.9","%","","","9.5","%","","n/a","","","","6.6","%"],["Fiscal 2025","","","7.4","%","","","12.8","%","","n/a","","","","7.3","%"]]
[[/GREPCENT_TABLE]]

See the Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations and Note 20, 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.

North America

Our net sales in the North America reportable segment for fiscal 2026 were $685.1 million, a decrease of $203.6 million, or 22.9%, primarily due to impact of $204.6 million, or 23.1%, related to divestitures, held for sale businesses, discontinued brands and exited product categories, as compared to the prior year. Organic net sales were effectively flat year-over-year, as growth in meal preparation and beverages categories was offset by lower sales in the baby & kids category.

The decrease in net sales was primarily due to lower sales in the snacks category, reflecting the disposition of the North American Snacks business in February 2026 and, to a lesser extent, declines in the meal preparation and personal care categories.

Adjusted EBITDA in fiscal 2026 was $61.2 million, a decrease of $4.2 million from $65.5 million in fiscal 2025. The decrease was primarily related to volume/mix and cost inflation, partially offset by productivity initiatives, reduction in selling, general, and administrative expenses, and improved pricing. Adjusted EBITDA margin was 8.9%, a 160-basis point increase from the prior year, primarily reflecting the improved Adjusted EBITDA margin following the sale of the North American Snacks business.

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International

Net sales in the International reportable segment for fiscal 2026 were $668.4 million, a decrease of $2.8 million, or 0.4%, including a favorable impact of $29.4 million, or 4.4% related to foreign exchange, as compared to the prior year. Organic net sales decreased $28.5 million, or 4.3%, to $633.4 million from $671.2 million in fiscal 2025.

The decrease in net sales for fiscal 2026 was primarily driven by lower sales in the baby & kids and snacks categories, partially offset by growth in the beverages and meal preparation categories. Organic net sales also declined, mainly due to softness in the baby & kids and meal preparation categories. The decrease in the baby & kids category was primarily driven by continued industry-wide volume softness in purees in the U.K. The decrease in the meal preparation category was due to a decline in private label spreads and drizzles as a result of contract losses, softness in meat alternatives and weak soup performance across brands.

Adjusted EBITDA in fiscal 2026 was $63.5 million, a decrease of $22.5 million from $86.0 million in fiscal 2025. The decrease was primarily driven by cost inflation and volume and mix softness, partially offset by productivity savings and pricing. Adjusted EBITDA margin was 9.5%, a 330-basis point decrease from the prior year.

Corporate and Other

The decrease in Corporate and Other Adjusted EBITDA primarily reflected a reduction in compensation-related expenses. Refer to Note 20, Segment Information, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for additional details.

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Liquidity and Capital Resources

We finance our operations and growth primarily with the cash flows we generate from our operations and from borrowings available to us under our Credit Agreement (as defined below). We believe that our cash flows from operations and borrowing capacity under our Credit Agreement will be adequate to meet anticipated operating and other expenditures through its maturity date. However, the Credit Agreement matures in December 2026, and the Company continues to engage with lenders and other third parties regarding refinancing, an extension of the maturity date, and potential capital raising or other strategic transactions. There can be no assurance that these efforts will be successful or completed on acceptable terms, or at all. Any default by us under the credit agreement, including our failure to repay in full the Credit Agreement at or prior to maturity, could have a material adverse effect on our business and financial condition, including being forced to seek relief under federal bankruptcy laws or to pursue a restructuring, wind-down, or liquidation, and holders of our common stock could experience a significant or complete loss of their investment. Please refer to the risk factor “Any default under our credit agreement or inability to refinance our indebtedness could have significant consequences” set forth in Part I, Item 1A, “Risk Factors” and Note 11, 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 entered into a Fourth Amended and Restated Credit Agreement (as subsequently amended, the “Credit Agreement”). The Credit Agreement originally provided for senior secured financing of $1,100.0 million in the aggregate, consisting of (1) $300.0 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800.0 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and was originally comprised of a $440.0 million U.S. revolving credit facility and $360.0 million global revolving credit facility) (the “Revolver”). Both the Revolver and the Term Loans mature on December 22, 2026. The Company’s obligations under the Credit Agreement are guaranteed by certain existing and future domestic subsidiaries of the Company and are secured by liens on assets of the Company and its material domestic subsidiaries, including the equity interest in each of their direct subsidiaries and intellectual property, subject to agreed-upon exceptions. The Credit Agreement includes financial covenants that require compliance with a consolidated secured leverage ratio, a consolidated leverage ratio and a consolidated interest coverage ratio.

On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. Pursuant to the Second Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 until September 30, 2023, 5.25:1.00 until December 31, 2023, 5.00:1.00 until December 31, 2024, and 4.25:1.00 thereafter. The Company’s maximum consolidated leverage ratio remained at 6.00:1.00, and its minimum consolidated interest coverage ratio remained at 2.75:1.00.

On May 5, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement. Pursuant to the Third Amendment, the Company’s maximum consolidated secured leverage ratio was amended to be 4.75:1.00 for the quarter ending June 30, 2025 through (and including) the quarter ending March 31, 2026, 4.50:1.00 for the quarter ending June 30, 2026, and 4.25:1.00 for the quarter ending September 30, 2026 and thereafter. The Third Amendment also reduced the size of the Revolver from $800.0 million to $700.0 million in the aggregate, with the U.S. revolving credit facility reduced from $440.0 million to $385.0 million and the global revolving credit facility reduced from $360.0 million to $315.0 million.

On September 11, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. Pursuant to the Fourth Amendment, (x) the Company’s maximum consolidated secured leverage ratio was amended to be 5.00:1.00 for the quarter ending June 30, 2025 and 5.50:1.00 for the quarter ending September 30, 2025 and thereafter, (y) the Company’s minimum consolidated interest coverage ratio was amended to be 2.00:1.00 for the quarter ending September 30, 2025 and thereafter and (z) a covenant was added requiring the Company to maintain a minimum Consolidated EBITDA (as such term is defined in the Credit Agreement as amended by the Fourth Amendment) of (i) $17.0 million for the quarter ending September 30, 2025 and (ii) $52.0 million for the cumulative two quarters ending September 30, 2025 and on December 31, 2025. The aforementioned financial covenants use financial measures that are defined under the Credit Agreement and not pursuant to GAAP. The Fourth Amendment also reduced the size of the Revolver from $700.0 million to $600.0 million in the aggregate, with the U.S. revolving credit facility reduced from $385.0 million to $330.0 million and the global revolving credit facility reduced from $315.0 million to $270.0 million.

As of June 30, 2026, the Company’s consolidated secured leverage ratio, consolidated leverage ratio and consolidated interest coverage ratio were 4.53:1.00, 4.53:1.00 and 2.48:1.00, respectively, and the Company was in compliance with all associated covenants. The aforementioned financial covenants are being reported as calculated under the Credit Agreement and not

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pursuant to generally accepted accounting principles in the U.S. (“GAAP”). Please refer to the Credit Agreement and amendments filed as exhibits to our periodic reports for further information related to the calculation thereof. For risks related to our indebtedness and compliance with these covenants, please refer to the risk factor “Any default under our credit agreement or inability to refinance our indebtedness could have significant consequences.” set forth in Part I, Item 1A, “Risk Factors”.

From the date of the Second Amendment until the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) the Secured Overnight Financing Rate plus a credit spread adjustment of 0.10% (“Term SOFR”) plus 2.5% per annum or (b) the Base Rate (as defined in the Credit Agreement) plus 1.5% per annum. Commencing on the date of the Third Amendment, loans under the Credit Agreement bore interest at (a) Term SOFR plus 3.00% per annum or (b) the Base Rate plus 2.00% per annum. Commencing on the date of the Fourth Amendment, loans under the Credit Agreement bear interest at (a) Term SOFR plus 4.00% per annum or (b) the Base Rate plus 3.00% per annum.

Excluding the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at June 30, 2026 was 7.92%. The Company uses interest rate swaps to hedge a portion of the interest rate risk related to its outstanding variable rate debt. As of June 30, 2026, the notional amount of the interest rate swaps was $400.0 million with fixed rate payments of 7.12%. Including the impact of hedges, the weighted average interest rate on outstanding borrowings under the Credit Agreement at June 30, 2026 was 7.38%. Additionally, the Credit Agreement contains a commitment fee of 0.25% per annum on the amount unused under the Credit Agreement.

As of June 30, 2026, there were $411.0 million of loans under the Revolver, $146.9 million of Term Loans, and $3.1 million of letters of credit outstanding under the Credit Agreement. As of June 30, 2026 and June 30, 2025, $185.9 million and $246.7 million, respectively, was available under the Credit Agreement, subject to compliance with the financial covenants. As of June 30, 2026, the Company was in compliance with all associated covenants.

Cash and Cash Equivalents

At June 30, 2026, our cash and cash equivalents balance was $58.1 million, relatively consistent with our cash and cash equivalents of $54.4 million at June 30, 2025. Our working capital was negative $414.5 million at June 30, 2026, a decrease of $667.4 million from $252.9 million at the end of fiscal 2025. The decrease was driven by the classification of $557.9 million of debt obligations, maturing on December 22, 2026, as current. Additionally, our total debt balance, net of unamortized issuance costs, at June 30, 2026 decreased by $147.0 million to $557.8 million as compared to $704.8 million at June 30, 2025 as a result of net repayments during the period.

Our cash balances are held in the U.S., U.K., Canada, Western Europe, the Middle East and India. As of June 30, 2026, substantially all cash was held outside of the U.S. and there are no material restrictions on repatriation.

We maintain our cash and cash equivalents primarily in money market funds or their equivalent. Accordingly, we do not believe that our investments have significant exposure to interest rate risk.

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Cash Provided by (Used in) Operating, Investing and Financing Activities

Cash provided by (used in) operating, investing and financing activities is summarized below.

[[GREPCENT_TABLE]]
[["","","Fiscal Year Ended June 30,"],["(Amounts in thousands)","","2026","","","2025","","","Change in Dollars"],["Cash flows provided by (used in):"],["Operating activities","","$","78,269","","","$","22,115","","","$","56,154"],["Investing activities","","","81,953","","","","3,619","","","","78,334"],["Financing activities","","","(151,114",")","","","(43,886",")","","","(107,228",")"],["Effect of exchange rate changes on cash","","","(5,385",")","","","18,200","","","","(23,585",")"],["Net increase in cash and cash equivalents","","$","3,723","","","$","48","","","$","3,675"]]
[[/GREPCENT_TABLE]]

Cash provided by operating activities was $78.3 million for the fiscal year ended June 30, 2026, an increase of $56.2 million from cash provided by operating activities of $22.1 million in the prior year. This increase in cash provided by operating activities versus the prior year resulted primarily from working capital changes versus the prior year, reflecting the following: (i) higher cash generation primarily due to focused inventory management, which generated year-over-year improvement of $76.3 million, (ii) a reduced outflow associated with accounts payable and accrued expenses in the amount of $11.3 million, (iii) an increase in accounts receivable collection of $10.6 million and (iv) a decrease in other assets recovery of $40.7 million. The changes in other current assets and accounts payable and accrued expenses for fiscal year 2026 reflected the recognition of a $35.0 million insurance receivable and corresponding settlement liability (see Note 17. Commitments and Contingencies).

Cash provided by investing activities was $81.9 million for the fiscal year ended June 30, 2026, an increase of $78.3 million from cash provided by investing activities of $3.6 million in the prior year. The increase in cash provided by investing activities was primarily due to the receipt of proceeds from the sale of the Company’s North American Snacks Business in fiscal 2026 and a $4.7 million reduction in capital expenditures. Investing activities in fiscal 2025 included the receipt of sale proceeds and dividends from the sale of our equity method investment of $12.6 million.

Cash used in financing activities was $151.1 million for the fiscal year ended June 30, 2026, an increase of $107.2 million compared to $43.9 million of cash used in financing activities in the prior year. The increase in cash used in financing activities was primarily due to higher net debt repayments during fiscal year ended June 30, 2026, including the use of $101.1 million of proceeds from the North American Snacks Transaction being used to repay a portion of the Term Loan and $15.0 million of incremental repayments of borrowings under the Revolver.

Free Cash Flow

Our Free Cash Flow was $57.7 million for fiscal 2026, an increase of $60.8 million from negative free cash flow of $3.2 million in fiscal 2025. This year-over-year increase resulted primarily from an increase in cash flows from operations of $56.2 million driven by the reasons explained above. See the Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures following the discussion of our results of operations for definitions and a reconciliation from our net cash provided by operating activities to Free Cash Flow.

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Share Repurchase Program

In January 2022, the Company’s Board of Directors authorized the repurchase of up to $200.0 million of the Company’s issued and outstanding common stock. Repurchases may be made from time to time in the open market, pursuant to pre-set trading plans, in private transactions or otherwise. The current 2022 authorization does not have a stated expiration date. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations. During the fiscal year ended June 30, 2026, the Company did not repurchase any shares under the repurchase program. As of June 30, 2026, the Company had $173.5 million of remaining authorization under the share repurchase program.

Reconciliation of Non-U.S. GAAP Financial Measures to U.S. GAAP Measures

We have included in this report measures of financial performance that are not defined by U.S. GAAP. We believe that these measures provide useful information to investors and include these measures in other communications to investors.

For each of these non-U.S. GAAP financial measures, we are providing below a reconciliation of the differences between the non-U.S. GAAP measure and the most directly comparable U.S. GAAP measure, an explanation of why our management and Board of Directors believe the non-U.S. GAAP measure provides useful information to investors and any additional purposes for which our management and Board of Directors use the non-U.S. GAAP measures. These non-U.S. GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measures.

Organic Net Sales

As noted above, we define organic net sales as net sales excluding the impact of acquisitions, divestitures, held for sale businesses, discontinued brands, exited product categories and foreign exchange. To adjust organic net sales for the impact of acquisitions, the net sales of an acquired business are excluded from fiscal quarters constituting or falling within the current period and prior period where the applicable fiscal quarter in the prior period did not include the acquired business for the entire quarter. To adjust organic net sales for the impact of divestitures, held for sale businesses, discontinued brands and exited product categories, the net sales of a divested business, held for sale business, discontinued brand or exited product category are excluded from all periods. To adjust organic net sales for the impact of foreign exchange, current period net sales for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average monthly exchange rates in effect during the corresponding period of the prior fiscal year, rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year.

A reconciliation between reported net sales and organic net sales is as follows:

[[GREPCENT_TABLE]]
[["(Dollars in thousands)","","North America","","","International","","","Hain Consolidated"],["Net sales - Twelve months ended June 30, 2026","","$","685,053","","","$","668,376","","","$","1,353,429"],["Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories","","","252,165","","","","5,659","","","","257,824"],["Less: Impact of foreign currency exchange","","","249","","","","29,363","","","","29,612"],["Organic net sales - Twelve months ended June 30, 2026","","$","432,639","","","$","633,354","","","$","1,065,993"],["Net sales - Twelve months ended June 30, 2025","","$","888,626","","","$","671,154","","","$","1,559,780"],["Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories","","","456,786","","","","9,251","","","","466,037"],["Organic net sales - Twelve months ended June 30, 2025","","$","431,840","","","$","661,903","","","$","1,093,743"],["Net sales decline","","","(22.9",")%","","","(0.4",")%","","","(13.2",")%"],["Less: Impact of divestitures, held for sale businesses, discontinued brands and exited product categories","","","(23.1",")%","","","(0.5",")%","","","(12.6",")%"],["Less: Impact of foreign currency exchange","","","0.0","%","","","4.4","%","","","1.9","%"],["Organic net sales decline","","","0.2","%","","","(4.3",")%","","","(2.5",")%"]]
[[/GREPCENT_TABLE]]

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Adjusted EBITDA

The Company defines Adjusted EBITDA as net loss before net interest expense, income taxes, depreciation and amortization, equity in net loss of equity-method investees, stock-based compensation, net, unrealized currency losses, proceeds from insurance claim, certain litigation expenses, net, plant closure related costs, net, warehouse and manufacturing consolidation and other costs, net, productivity and transformation costs, CEO succession costs, costs associated with acquisitions, divestitures and other transactions, (gains) losses on sales of assets, goodwill impairment, long-lived asset and intangibles impairment and other adjustments. The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation. Adjusted EBITDA is a non-U.S. GAAP measure and may not be comparable to similarly titled measures reported by other companies.

We do not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP. The principal limitation of Adjusted EBITDA is that it excludes certain expenses and income that are required by U.S. GAAP to be recorded in our consolidated financial statements. In addition, Adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or included in determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with U.S. GAAP results.

A reconciliation of net loss to Adjusted EBITDA is as follows:

[[GREPCENT_TABLE]]
[["","","Fiscal Year Ended June 30,"],["(Amounts in thousands)","","2026","","","2025"],["Net loss","","$","(304,923",")","","$","(530,841",")"],["Depreciation and amortization","","","52,552","","","","44,259"],["Equity in net loss of equity-method investees","","","351","","","","1,813"],["Interest expense, net","","","50,154","","","","47,773"],["(Benefit) provision for income taxes","","","(2,208",")","","","15,297"],["Stock-based compensation, net","","","5,471","","","","8,149"],["Unrealized currency losses","","","951","","","","3,823"],["Certain litigation expenses, net(a)","","","4,867","","","","3,473"],["Proceeds from insurance claim(b)","","","(25,900",")","","","\u2014"],["Restructuring activities"],["Productivity and transformation costs","","","22,039","","","","21,530"],["Plant closure related costs, net","","","2,206","","","","1,215"],["Warehouse/manufacturing consolidation and other costs, net","","","\u2014","","","","384"],["CEO succession","","","\u2014","","","","4,774"],["Acquisitions, divestitures and other"],["Transaction and integration costs, net(c)","","","14,125","","","","(488",")"],["Loss (gain) on sale of assets","","","48,710","","","","(3,194",")"],["Impairment charges"],["Goodwill impairment","","","193,219","","","","428,882"],["Long-lived asset and intangibles impairment","","","27,394","","","","66,940"],["Adjusted EBITDA","","$","89,008","","","$","113,789"]]
[[/GREPCENT_TABLE]]

(a)
Expenses and items relating to securities class action, baby food litigation, and SEC investigation.

(b)
Represents a receivable under the Company's representation and warranty insurance related to one of its prior acquisitions, which was collected on January 2, 2026.

(c)
Expenses and items primarily relating to strategic review.

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Free Cash Flow

In our internal evaluations, we use the non-GAAP financial measure “Free Cash Flow.” The difference between Free Cash Flow and cash flows provided by or used in operating activities, which is the most comparable U.S. GAAP financial measure, is that Free Cash Flow reflects the impact of purchases of property, plant and equipment (“capital expenditure”). Since capital expenditure 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 expenditure when evaluating our cash flows provided by or used in operating activities. We view Free Cash Flow as an important measure because it is one factor in evaluating the amount of cash available for discretionary investments. We do not consider Free Cash Flow in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP. A reconciliation from cash flows provided by operating activities to Free Cash Flow is as follows:

[[GREPCENT_TABLE]]
[["","","Fiscal Year Ended June 30,"],["(Amounts in thousands)","","2026","","","2025"],["Net cash provided by operating activities","","$","78,269","","","$","22,115"],["Purchases of property, plant and equipment","","","(20,613",")","","","(25,284",")"],["Free Cash Flow","","$","57,656","","","$","(3,169",")"]]
[[/GREPCENT_TABLE]]

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 and operating leases. See Note 8, Leases, and Note 11, Debt and Borrowings, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. The policies below have been identified as the critical accounting policies we use which require us to make estimates and assumptions and exercise judgment that affect the reported amounts of assets and liabilities at the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonableness of our critical accounting estimates; however, materially different amounts might be reported under different conditions or using assumptions, estimates or making judgments different from those that we have applied. Our critical accounting policies, including our methodology for estimates made and assumptions used, are as follows:

Variable Consideration

In addition to fixed contract consideration, many of the Company’s contracts include some form of variable consideration. The Company offers various trade promotions and sales incentive programs to customers and consumers, such as price discounts, slotting fees, in-store display incentives, cooperative advertising programs, new product introduction fees and coupons. The expenses associated with these programs are accounted for as reductions to the transaction price of products and are therefore deducted from sales to determine reported net sales. Trade promotions and sales incentive accruals are subject to significant management estimates and assumptions. The critical assumptions used in estimating the accruals for trade promotions and sales incentives include the Company’s estimate of expected levels of performance and redemption rates. The Company exercises judgment in developing these assumptions. These assumptions are based upon historical performance of the retailer or distributor customers with similar types of promotions adjusted for current trends. The Company regularly reviews and revises, when deemed necessary, estimates of costs to the Company for these promotions and incentives based on what has been incurred by the customers. The terms of most of the promotion and incentive arrangements do not exceed a year and therefore do not require highly uncertain long-term estimates. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorization process for deductions taken by a customer from amounts otherwise due to the Company. 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.

Valuation of Long-lived Assets

The Company periodically evaluates the carrying value of long-lived assets held and used in the business and with definite lives, when events and circumstances occur indicating that the carrying amount of the asset or its asset group may not be recoverable. An impairment test is performed when the estimated undiscounted cash flows associated with the asset or asset

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group is less than its carrying value. If the undiscounted cash flows are less than the carrying value of the asset or its asset group, the Company performs test to fair value the asset or its asset group. A loss is recognized based on the amount, if any, by which the carrying value exceeds the estimated fair value of the asset or asset group.

Goodwill

Goodwill is not amortized but rather is tested at least annually for impairment on April 1 of each year, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable.

Goodwill is tested for impairment at the reporting unit level. A reporting unit represents an operating segment or a component of an operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

We may elect not to perform the qualitative assessment for some or all reporting units and instead perform a quantitative impairment test. The estimate of the fair values of our reporting units are based on the best information available as of the date of the assessment. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. We generally use a blended analysis of the Discounted Cash Flow (“DCF”) method income approach and the Guideline Public Company Method (“GPCM”) market approach.

The DCF method estimates the value based on the present value of estimated future cash flows and economic benefits that are expected to be produced. Considerable management judgment is necessary to evaluate the impact of operating and external economic factors in estimating our future cash flows. The assumptions we use in our tests include projections of growth rates and profitability, our estimated working capital needs, as well as our weighted average cost of capital (“WACC”).

The GPCM approach estimates the value of a reporting unit through analysis of recent sales of comparable assets or business entities by comparing it to comparable publicly-disclosed transactions in similar businesses. Estimates used in the guideline public company method include the identification of similar businesses with comparable business factors.

The key assumptions used in our quantitative impairment tests are inherently uncertain. They require a high degree of estimation and are subject to change based on, among other factors, industry and geopolitical conditions, our ability to navigate changing macroeconomic conditions and trends and the timing and success of strategic initiatives. Changes in economic and operating conditions impacting the assumptions we made could result in goodwill impairment in future periods. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

In fiscal 2026, the Company recorded aggregated non-cash goodwill impairment charges of $38,495 within its North America segment and $154,724 within its International reportable segment as a result of goodwill impairment testing discussed below. Set forth is a table of each reporting unit’s goodwill carrying value as of, and impairment charges and other activity recorded during the periods presented:

[[GREPCENT_TABLE]]
[["","","Reporting Unit"],["(Dollars in thousands)","","U.S.","","","U.K.","","","Western Europe"],["Goodwill as of June 30, 2025","","$","312,321","","","$","116,212","","","$","42,138"],["Impairment charge during three months ended December 31, 2025","","","(38,495",")","","","(81,413",")","","","\u2014"],["Divestiture during three months ended March 31, 2026","","","(57,082",")","","","\u2014","","","","\u2014"],["Impairment charge during three months ended March 31, 2026","","","\u2014","","","","(31,018",")","","","\u2014"],["Impairment charge during three months ended June 30, 2026","","","\u2014","","","","\u2014","","","","(42,293",")"],["Translation","","","\u2014","","","","(3,781",")","","","155"],["Goodwill as of June 30, 2026","","$","216,744","","","$","\u2014","","","$","\u2014"]]
[[/GREPCENT_TABLE]]

As of June 30, 2025, the Company had qualitatively or quantitatively tested all goodwill associated with its reporting units for impairment and, as previously disclosed, determined that the goodwill related to the U.S. and U.K. reporting units remained at risk for potential future impairment since such reporting units were impaired in fiscal 2025.

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Second quarter of fiscal 2026

During the second quarter of fiscal 2026, as a result of a continued decline in the projected performance and cash flows of the U.S. reporting unit, and in connection with the pending agreement to sell its North American Snacks Business, the Company completed an interim quantitative impairment test of goodwill. As a result of a continued decline in net sales of Hartley’s® jelly, the Company conducted an interim quantitative impairment test for the Hartley’s® jelly indefinite-lived tradename and recognized impairment. Due to the recognition of an intangible asset impairment charge within the United Kingdom (“U.K.”) reporting unit in the International reportable segment and a continued decline in the projected performance and cash flows of the U.K. reporting unit, the Company also completed an interim quantitative impairment test of goodwill. Consequently, the Company recognized non-cash impairment charges of $38,495 and $81,413 to reduce the carrying values of the U.S. and U.K. reporting units goodwill, respectively. The fair value was estimated using the Discounted Cash Flow (“DCF”) method income approach as such method was determined to be more representative of future performance from a market participant point of view. The U.K. reporting unit’s impairment charge reflected the sales volume decline that the Company continued to experience. The discount rate in both quantitative tests also reflected an increase in the small stock premium related to a decline in the Company’s market capitalization. For the Western Europe and Ella’s Kitchen UK reporting units, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount, including goodwill. The Company concluded that the qualitatively tested reporting units’ estimated fair values exceeded their carrying amounts.

Third quarter of fiscal 2026

During the third quarter of fiscal 2026, as a result of a decline in the projected performance and expected future cash flows, the Company completed interim quantitative impairment tests of goodwill for all of its international reporting units: U.K., Western Europe and Ella’s Kitchen UK. For the U.S. reporting unit, the Company performed a qualitative evaluation to assess factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill, and concluded that the U.S. reporting unit’s estimated fair value exceeded its carrying amount. As of March 31, 2026, the U.K. reporting unit’s carrying amount exceeded its estimated fair value, resulting in the recognition of a non-cash impairment charge of $31,018 to reduce the carrying value of the U.K. reporting unit goodwill to nil. The fair values for the quantitatively tested reporting units were estimated using a blended approach of the Discounted Cash Flow (“DCF”) method income approach and the Guideline Public Company Methodology (“GPCM”) market approach. The U.K. reporting unit’s impairment charges reflected a decline in sales volume and further compression in Adjusted EBITDA that the Company continued to experience. The estimated fair values of the Western Europe and Ella’s Kitchen UK reporting units exceeded their carrying amounts. The discount rate in the quantitative tests for the Western Europe and Ella’s Kitchen UK reporting units also reflected an increase in the small stock premium related to a decline in the Company’s market capitalization. We disclosed that the goodwill related to the U.S. and Western Europe reporting units remained at risk of potential impairment if the fair values of these reporting units, and their associated assets, decreased in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates.

Annual impairment testing as of April 1, 2026

While the Company’s annual impairment testing date is on April 1, 2026 (the first day of the fourth quarter of fiscal 2026), the previously aforementioned quantitative tests for Western Europe and Ella’s Kitchen UK reporting units were utilized for the annual impairment test given there were no significant changes to the risks of these reporting units between March 31, 2026 and April 1, 2026. For the U.S. reporting unit, the previously aforementioned qualitative assessment for the U.S. reporting unit was utilized for the annual impairment test given there were no significant changes to the risks of these reporting units between March 31, 2026 and April 1, 2026.

Fourth quarter of fiscal 2026

As of June 30, 2026, as a result of a continued decline in the projected performance and cash flows of the Western Europe reporting unit, and in connection with the pending agreement to sell its International Business, the Company completed an interim quantitative impairment test of goodwill. The Company also performed a qualitative assessment of its U.S. and Ella’s Kitchen U.K. reporting units and concluded that the estimated fair values of such reporting units exceeded their respective carrying amounts. As of June 30, 2026, the Western Europe reporting unit’s carrying amount exceeded its estimated fair value of $89,112, resulting in the recognition of a non-cash impairment charge of $42,293 to reduce the carrying value of the Western Europe reporting unit goodwill to nil. The fair value was estimated using the DCF method income approach as such method was determined to be more representative of future performance from a market participant point of view. The Western Europe reporting unit’s impairment charges primarily reflected a decline in forecasted Adjusted EBITDA. Furthermore, given the continued known decline in the Company’s Western Europe forecasts, the discount rate utilized to measure risk in the DCF methodology increased.

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Subsequent to these impairment charges, the remaining goodwill at the U.S. reporting unit was $216,744 as of June 30, 2026. There was no remaining goodwill at the U.K. and Western Europe reporting units as of June 30, 2026. The goodwill related to the U.S. reporting unit is at risk of potential impairment if the fair value of the reporting unit, and its associated assets, decrease in value due to the amount and timing of expected future cash flows, decreased customer demand for products, an inability to execute management’s business strategies, or general market conditions, such as economic downturns, and changes in interest rates, including discount rates. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company’s estimates. If the Company’s ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record additional impairment charges in future periods.

For the qualitatively tested reporting units (U.S. and Ella’s Kitchen UK), the Company performed a qualitative evaluation as of June 30, 2026 to assess factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The Company concluded that the qualitatively tested reporting units’ estimated fair values exceeded their carrying amounts.

We performed a market capitalization reconciliation with the expectation that the market capitalization should reconcile within a reasonable range to the sum of the fair values of the individual reporting units. Such reconciliation often includes both qualitative and quantitative assessments as is the case with the Company’s reporting units as of June 30, 2026. When an entity performs a qualitative assessment for some reporting units but proceeds to a quantitative assessment for others, reconciling the overall market capitalization to the aggregate fair value of reporting units can be challenging and requires significant judgment. There is no requirement to determine the fair value of reporting units for which only a qualitative impairment test is performed. Therefore, when performing an overall comparison of the sum of the fair values of the individual reporting units to the market capitalization, we included the current year fair value for reporting units for which a quantitative test was performed. Upon performing the market capitalization reconciliation, we noted a reasonable reconciliation between the sum of the reporting unit fair values and the Company’s market capitalization once adjusted for the impact of corporate costs not allocated to the reporting units.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets consist primarily of acquired tradenames and trademarks. Indefinite-lived intangible assets are evaluated on an annual basis in conjunction with the Company’s evaluation of goodwill, or on an interim basis if and when events or circumstances change that would more likely than not reduce the fair value of any of its indefinite-life intangible assets below their carrying value. In assessing fair value, the Company utilizes a “relief from royalty payments” methodology. This approach involves two steps: (i) estimating the royalty rates for each trademark and (ii) applying these royalty rates to a projected net sales stream and discounting the resulting cash flows to determine fair value. If the carrying value of the indefinite-lived intangible assets exceeds the fair value of the assets, the carrying value is written down to fair value in the period identified.

The Company performs an indefinite-lived asset impairment test annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In accordance with ASC 350, we may first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test. If an entity elects to perform a qualitative assessment, it first shall assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that an indefinite-lived intangible asset is impaired. One procedure we perform during interim periods to determine whether indicators of impairment are present includes a comparison of net sales used in the most recent quantitative impairment tests to forecasted net sales for the same fiscal year (or balance of the fiscal year when performing an interim review) in order to identify brands for which the current fiscal year net sales are expected to be lower than the forecasted fiscal year net sales per the latest quantitative test. The performance of these brands is then reviewed by management to determine if the shortfall to forecasted net sales was related to events and circumstances that are expected to be temporary in nature, or if it was caused by a more pervasive issue that could serve as in impairment indicator (e.g., loss of key customers, discontinuance of certain product categories within a brand, etc.). We use this risk-based approach to determine which brands we would quantitatively test for impairment, whether as part of fiscal year annual impairment testing or an interim period test.

During the third quarter of fiscal 2026, as a result of a continued decline in actual and projected net sales driven by challenges related to regaining Earth’s Best® formula distribution, the Company conducted an interim quantitative impairment test for its Earth’s Best® Organic indefinite-lived tradename in its North America reportable segment. The Company concluded that the indefinite-lived intangible asset carrying amount exceeded its estimated fair value and recorded a non-cash impairment charge of $2,038 during the three months ended March 31, 2026, which was recorded within long-lived asset and intangibles impairment on the consolidated statement of operations. This tradename was subsequently reclassified to definite-lived and ascribed a useful life of 10 years.

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During the third quarter of fiscal 2026, as a result of a decline in projected net sales driven by shifting consumer behavior towards private label soup, the Company conducted an interim quantitative impairment test for its soup indefinite-lived tradenames (Cully & Sully®, Yorkshire Provender®, and New Covent Garden® soups). The Company concluded that the estimated fair value exceeded the carrying amount by 8.0%. The soup indefinite-lived intangible assets are part of the International reportable segment and had a remaining aggregate carrying value of $22,702 as of June 30, 2026.

During the fiscal year ended June 30, 2026, the Company conducted an interim quantitative impairment test for its Ella’s Kitchen® baby and kids foods and Hartley’s® jelly tradenames and recorded a non-cash impairment charge of $10,432 for Hartley’s® jelly indefinite-lived tradename. The estimated fair value of the Ella’s Kitchen® tradename exceeded its carrying amount by 16.5%. These tradenames were subsequently reclassified to definite-lived and ascribed a useful life of 10 years. Such tradenames are part of the International reportable segment and have remaining carrying values of $33,528 and $36,553, respectively, as of June 30, 2026.

Effective April 1, 2026, as part of its annual impairment testing and in connection with the strategic review, the Company elected to change the useful life of its remaining intangible assets from indefinite to definite. See Note 9, Goodwill and Other Intangible Assets in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.

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. Deferred tax assets also include unused tax net operating losses and tax credits that we are allowed to carry forward to future years. Accounting rules permit us to carry deferred tax assets on the balance sheet at full value after consideration of the four sources of income, namely taxable income in prior year carryback years, the future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income exclusive of reversing temporary differences, to determine if the deferred tax assets are realizable. A valuation allowance must be recorded against a deferred tax asset if they are not realizable after considering the four sources of income. Our determination of our valuation allowances is based upon a number of assumptions, judgments and estimates, including the reversal pattern of existing temporary differences and forecasted earnings.

Recent Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for information regarding recent accounting pronouncements.

Seasonality

Certain of our product lines have seasonal fluctuations. Hot tea and soup sales are stronger in colder months. As such, our results of operations and our cash flows for any particular quarter are not indicative of the results we expect for the full year, and our historical seasonality may not be indicative of future quarterly results of operations. Historically, net sales and diluted earnings per share in the first fiscal quarter have typically been the lowest of our four quarters.

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