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* This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non-GAAP financial measures to GAAP financial measures and other non-GAAP financial calculations are provided in the tables included in this press release.

Cash Flow and Balance Sheet Highlights

• Net cash provided by operating activities in the second quarter was $20.7 million compared to $2.5 million in the prior year period.

• Free cash flow in the second quarter was $14.8 million compared to negative free cash flow of $4.4 million in the prior year period.

• Total debt at the end of the fiscal second quarter was $809.2 million down from $828.7 million at the beginning of the fiscal year.

• Net debt at the end of the fiscal second quarter was $755.6 million compared to $775.4 million at the beginning of the fiscal year.

• The company ended the fiscal second quarter with a net secured leverage ratio of 4.2x as calculated under our amended credit agreement as compared to 4.3x at the beginning of the fiscal year.
  

SEGMENT HIGHLIGHTS

The company operates under two reportable segments: North America and International.

North America

North America net sales in the fiscal second quarter were $267.7 million. This represents a 5.2% decrease compared to the prior year period and a sequential improvement from the 9.8% decrease in the fiscal first quarter. Organic net sales decreased by 4.8% from the prior year period, representing a sequential improvement from the 9.3% decrease in the fiscal first quarter. As expected, the decrease was primarily due to lower sales in baby formula as a result of continued industry-wide challenges in organic formula supply, as well as in Snacks as we shifted our promotional strategy and optimized our channel mix for improved trade efficiency and profitability. This decrease was partially offset by growth in Beverages.

Segment gross profit in the fiscal second quarter was $62.0 million, a decrease of 12.9% from the prior year period. Adjusted gross profit was $66.4 million, a decrease of 6.7% from the prior year period. Gross margin was 23.2%, a 200-basis point decrease from the prior year period, and adjusted gross margin was 24.8%, a 40-basis point decrease from the prior year period. The decrease was driven by deleverage on lower sales volume as well as by inflation, partially offset by pricing and productivity.

Adjusted EBITDA in the fiscal second quarter was $31.2 million, a decrease of 18.9% from the prior year period. The decrease was driven primarily by lower volume, inflation and marketing investments, partially offset by productivity. Adjusted EBITDA margin was 11.7%, a 190-basis point decrease from the prior year period.

International

International net sales in the fiscal second quarter demonstrated continued strength, up 8.5% year-over-year to $186.4 million. This increase reflects 5.8 percentage points of growth from the favorable impact of foreign exchange. The increase was primarily driven by growth in Meal Prep as well as in Beverages.

Segment gross profit in the fiscal second quarter was $40.2 million, a 22.9% increase from the prior year period. Adjusted gross profit was $40.4 million, an increase of 23.3% from the prior year period. Each of gross margin and adjusted gross margin was 21.6%, representing a 250-basis point and 260-basis point increase from the prior year period, respectively. The increase in gross profit was mainly due to pricing partially offset by inflation.

Adjusted EBITDA in the fiscal second quarter was $26.0 million, a 35.0% increase from the prior year period. The increase was driven primarily by pricing, partially offset by lower volumes and inflation. Adjusted EBITDA margin was 13.9%, a 270-basis point improvement from the prior year period.

FISCAL 2024 GUIDANCE**

Lee Boyce, Executive Vice President and Chief Financial Officer, stated, “We are making early progress against Hain Reimagined, especially in the delivery of fuel as planned in this foundational year of the restructure program. We have accelerated some of the initiatives outlined in the Focus Pillar, primarily portfolio and channel mix improvements. This is expected to create near-term revenue headwind as we rationalize lower margin SKUs and sales. As a result, we believe it is prudent to take a more conservative view of the balance of fiscal 2024. In addition, we expect less of a tailwind from foreign exchange than when we initially provided guidance in August. Considering these factors as well as performance year-to-date, we are adjusting our guidance for the full year.”

The company is revising guidance for fiscal 2024 as follows:

• Organic net sales growth of approximately 1% or more, compared to previous guidance of 2% to 4% growth.

  • This reflects a reduction in the expected foreign exchange tailwind assumed in our fiscal year 2024 guidance provided in August from approximately 2 points to 1 point, assuming continuation of current rates.

• Adjusted EBITDA between $155 million and $160 million, compared to previous guidance of $155 million to $165 million, aligned to the associated revenue assumptions.

• Free cashflow of $40 to $45 million, compared to previous guidance of $50 to $55 million, reflecting costs associated with Hain Reimagined.

** The forward-looking non-GAAP financial measures included in this section are not reconciled to the comparable forward-looking GAAP financial measures. The company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the company is unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures but would not impact the non-GAAP measures. Such items may include certain litigation and related expenses, transaction costs associated with acquisitions and divestitures, productivity and transformation costs, impairments, gains or losses on sales of assets and businesses, foreign exchange movements and other items. The unavailable information could have a significant impact on the company’s GAAP financial results.

Conference Call and Webcast Information

Hain Celestial will host a conference call and webcast today at 8:00 AM EST to discuss its results and business outlook. The live webcast and the accompanying presentation will be available under the Investors section of the company’s corporate website at www.hain.com. Investors and analysts can access the live call by dialing 877-407-9716 or 201-493-6779. Participation by the press and public in the Q&A session will be in listen-only mode. A replay of the call will be available approximately shortly after the conclusion of the live call until Wednesday, February 14, 2024, and can be accessed by dialing 844-512-2921 or 1-412-317-6671 and referencing the conference access ID: 13744015.

About The Hain Celestial Group

Hain Celestial Group is a leading 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, our portfolio of beloved brands has intentionally focused on delivering nutrition and well-being that positively impacts today and tomorrow. Headquartered in Hoboken, N.J., Hain Celestial’s products across snacks, baby/kids, beverages, meal preparation, and personal care, are marketed and sold in over 75 countries around the world. Our leading brands include Garden Veggie™ snacks, Terra^® chips, Garden of Eatin’^® snacks, Earth’s Best^® and Ella’s Kitchen^® baby and kids foods, Celestial Seasonings^® teas, Joya^® and Natumi^® plant-based beverages, Greek Gods^® yogurt, Cully & Sully^®, Imagine^® and New Covent Garden^® soups, Yves^® and Linda McCartney’s^® (under license) meat-free, and Alba Botanica^® natural sun care, among others. For more information, visit hain.com and LinkedIn.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “may,” “should,” “plan,” “intend,” “potential,” “will” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, among other things: our beliefs or expectations relating to our future performance, results of operations and financial condition; our strategic initiatives (including statements related to Hain Reimagined and our related investments in our business); our business strategy; the impact of foreign exchange on our results; our brand portfolio; product performance; distribution of our products; and current or future macroeconomic trends.

Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; our ability to manage our supply chain effectively; input cost inflation, including with respect to freight and other distribution costs; disruption of operations at our manufacturing facilities; reliance on independent contract manufacturers; changes to consumer preferences; customer concentration; reliance on independent distributors; risks associated with operating internationally; pending and future litigation, including litigation relating to Earth’s Best® baby food products; the reputation of our company and our brands; compliance with our credit agreement; foreign currency exchange risk; the availability of organic ingredients; risks associated with outsourcing arrangements; our ability to execute our cost reduction initiatives and related strategic initiatives; risks associated with conflicts in Eastern Europe and the Middle East and other geopolitical events; our ability to identify and complete acquisitions or divestitures and our level of success in integrating acquisitions; our reliance on independent certification for a number of our products; our ability to use and protect trademarks; general economic conditions; cybersecurity incidents; disruptions to information technology systems; changing rules, public disclosure regulations and stakeholder expectations on ESG-related matters; the impact of climate change; liabilities, claims or regulatory change with respect to environmental matters; potential liability if our products cause illness or physical harm; the highly regulated environment in which we operate; compliance with data privacy laws; our ability to issue preferred stock; the adequacy of our insurance coverage; impairments in the carrying value of goodwill or other intangible assets; and other risks and matters described in our most recent Annual Report on Form 10-K and our other filings from time to time with the U.S. Securities and Exchange Commission.

We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.

Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures, including, among others, organic net sales, adjusted operating income and its related margin, adjusted gross profit and its related margin, adjusted net income and its related margin, adjusted earnings per diluted share, adjusted EBITDA and its related margin, free cash flow and net debt. The reconciliations of historic non-GAAP financial measures to the comparable GAAP financial measures are provided in the tables below. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read only in connection with the company’s consolidated financial statements presented in accordance with GAAP.

We define our non-GAAP financial measures as follows:

• Organic net sales: net sales excluding the impact of acquisitions, divestitures and discontinued brands. 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 and discontinued brands, the net sales of a divested business or discontinued brand are excluded from all periods.

• Adjusted gross profit and its related margin: gross profit, before inventory write-downs related to exited categories, plant closure related costs, net and warehouse and manufacturing consolidation and other costs, net.

• Adjusted operating income and its related margin: operating income (loss) before certain litigation expenses, net, inventory write-downs related to exited categories, plant closure related costs, net, productivity and transformation costs, CEO succession costs, warehouse and manufacturing consolidation and other costs, net, costs associated with acquisitions, divestitures and other transactions, and long-lived asset impairments.

• Adjusted net income and its related margin and diluted net income per common share, as adjusted: net (loss) income, adjusted to exclude the impact of certain litigation expenses, net, inventory write-downs related to exited categories, plant closure related costs, net, productivity and transformation costs, CEO succession costs, warehouse and manufacturing consolidation and other costs, net, costs associated with acquisitions, divestitures and other transactions, (gains) losses on sales of assets, long-lived asset impairments, unrealized currency losses and the related tax effects of such adjustments.

• Adjusted EBITDA: 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 (gains) losses, certain litigation and related costs, inventory write-downs related to exited categories, plant closure related costs, net, productivity and transformation costs, CEO succession costs, warehouse and manufacturing consolidation and other costs, costs associated with acquisitions, divestitures and other transactions, (gains) losses on sales of assets, long-lived asset impairments and other adjustments.

• Free cash flow: net cash provided by or used in operating activities less purchases of property, plant and equipment.

• Net debt: total debt less cash and cash equivalents.
  

We believe that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the company’s operations and are useful for period-over-period comparisons of operations. We provide:

• Organic net sales to demonstrate the growth rate of net sales excluding the impact of acquisitions, divestitures and discontinued brands, and believe organic net sales is useful to investors because it enables them to better understand the growth of our business from period to period.

• Adjusted results as important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

• Free cash flow as one factor in evaluating the amount of cash available for discretionary investments.

• Net debt as a useful measure to monitor leverage and evaluate the balance sheet.

Investor Relations Contact:
Alexis Tessier
Investor.Relations@hain.com

Media Contact:
Jen Davis
Jen.Davis@hain.com