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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________ 
FORM 10-Q
___________________________________________ 
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2023
or
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from                      to                     
Commission File No. 0-22818
___________________________________________ 
https://cdn.kscope.io/5e876b13a7f0c27d9498af0f8adca09a-HainCelestial-Logo-FullColor-RGB.jpg
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
___________________________________________ 
Delaware22-3240619
(State or other jurisdiction
of incorporation)
(I.R.S. Employer Identification No.)

221 River Street, Hoboken, NJ
 07030
(Address of principal executive offices)(Zip Code)
(516587-5000
(Registrant’s telephone number, including area code)

N/A
Former name, former address and former fiscal year, if changed since last report:
___________________________________________ 


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Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareHAINThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer¨
Non-accelerated filer¨Smaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes      No  ý

As of February 1, 2024, there were 89,832,428 shares outstanding of the registrant’s Common Stock, par value $.01 per share.


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THE HAIN CELESTIAL GROUP, INC.
Index
  
Part I - Financial InformationPage
Item 1.
Item 2.
Item 3.
Item 4.
Part II - Other Information
Items 3 and 4 are not applicable.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.

 
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Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended December 31, 2023 (the “Form 10-Q”) contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of The Hain Celestial Group, Inc. (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”) may differ materially from those expressed or implied by such forward-looking statements. The words “believe,” “expect,” “anticipate,” “may,” “should,” “plan,” “intend,” “potential,” “will” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, among other things: our beliefs or expectations relating to our future performance, results of operations and financial condition; our strategic initiatives (including statements related to Hain Reimagined and our related investments in our business); our business strategy; our supply chain, including the availability and pricing of raw materials; our brand portfolio; pricing actions and product performance; inflation rates; and current or future macroeconomic trends.

Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include: challenges and uncertainty resulting from the impact of competition; 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, this Form 10-Q and other reports that we file in the future.

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



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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 2023 AND JUNE 30, 2023
(In thousands, except par values)
December 31,June 30,
20232023
ASSETS
Current assets:
Cash and cash equivalents$53,672 $53,364 
Accounts receivable, less allowance for doubtful accounts of $2,607 and $2,750, respectively
192,538 160,948 
Inventories295,276 310,341 
Prepaid expenses and other current assets57,954 66,378 
Total current assets599,440 591,031 
Property, plant and equipment, net273,451 296,325 
Goodwill939,561 938,640 
Trademarks and other intangible assets, net295,011 298,105 
Investments and joint ventures11,411 12,798 
Operating lease right-of-use assets, net91,388 95,894 
Other assets23,372 25,846 
Total assets$2,233,634 $2,258,639 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$169,054 $134,780 
Accrued expenses and other current liabilities90,857 88,520 
Current portion of long-term debt7,569 7,567 
Total current liabilities267,480 230,867 
Long-term debt, less current portion801,675 821,181 
Deferred income taxes52,900 72,086 
Operating lease liabilities, noncurrent portion86,022 90,014 
Other noncurrent liabilities29,736 26,584 
Total liabilities1,237,813 1,240,732 
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock - $.01 par value, authorized 5,000 shares; issued and outstanding: none
  
Common stock - $.01 par value, authorized 150,000 shares; issued: 111,818 and 111,339 shares, respectively; outstanding: 89,812 and 89,475 shares, respectively
1,118 1,113 
Additional paid-in capital1,224,667 1,217,549 
Retained earnings628,650 652,561 
Accumulated other comprehensive loss(130,025)(126,216)
1,724,410 1,745,007 
Less: Treasury stock, at cost, 22,006 and 21,864 shares, respectively
(728,589)(727,100)
Total stockholders’ equity995,821 1,017,907 
Total liabilities and stockholders’ equity$2,233,634 $2,258,639 
See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In thousands, except per share amounts) 
 Three Months Ended December 31,Six Months Ended December 31,
 2023202220232022
Net sales$454,100 $454,208 $879,129 $893,559 
Cost of sales351,885 350,351 692,971 695,367 
Gross profit102,215 103,857 186,158 198,192 
Selling, general and administrative expenses73,952 72,357 151,121 147,308 
Long-lived asset impairment20,666 340 21,360 340 
Productivity and transformation costs
6,869 986 13,272 1,759 
Amortization of acquired intangible assets1,509 2,785 3,464 5,573 
Operating (loss) income(781)27,389 (3,059)43,212 
Interest and other financing expense, net16,138 10,812 29,382 18,489 
Other income, net(42)(1,062)(307)(2,852)
(Loss) income before income taxes and equity in net loss of equity-method investees(16,877)17,639 (32,134)27,575 
(Benefit) provision for income taxes(4,249)6,357 (9,628)8,988 
Equity in net loss of equity-method investees907 316 1,405 698 
Net (loss) income$(13,535)$10,966 $(23,911)$17,889 
Net (loss) income per common share:
Basic$(0.15)$0.12 $(0.27)$0.20 
Diluted$(0.15)$0.12 $(0.27)$0.20 
Shares used in the calculation of net (loss) income per common share:
Basic89,811 89,380 89,661 89,343 
Diluted89,811 89,578 89,661 89,535 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In thousands)
 Three Months Ended
December 31, 2023December 31, 2022
 Pretax
amount
Tax (expense) benefitAfter tax amountPretax
amount
Tax (expense) benefitAfter tax amount
Net (loss) income$(13,535)$10,966 
Other comprehensive income:
Foreign currency translation adjustments before reclassifications$36,536 $ $36,536 $59,674 $ $59,674 
Change in deferred losses on cash flow hedging instruments
(10,108)2,501 (7,607)(2,475)610 (1,865)
Change in deferred gains on fair value hedging instruments47 (11)36 691 (170)521 
Change in deferred losses on net investment hedging instruments
(4,474)1,107 (3,367)(6,285)1,553 (4,732)
Total other comprehensive income
$22,001 $3,597 $25,598 $51,605 $1,993 $53,598 
Total comprehensive income$12,063 $64,564 
 Six Months Ended
December 31, 2023December 31, 2022
 Pretax
amount
Tax (expense) benefitAfter tax amountPretax
amount
Tax (expense) benefitAfter tax amount
Net (loss) income$(23,911)$17,889 
Other comprehensive income (loss):
Foreign currency translation adjustments before reclassifications$3,603 $ $3,603 $(7,476)$ $(7,476)
Change in deferred (losses) gains on cash flow hedging instruments
(6,871)1,708 (5,163)11,755 (3,028)8,727 
Change in deferred (losses) gains on fair value hedging instruments(334)83 (251)418 (100)318 
Change in deferred losses on net investment hedging instruments
(2,653)655 (1,998)(511)78 (433)
Total other comprehensive (loss) income
$(6,255)$2,446 $(3,809)$4,186 $(3,050)$1,136 
Total comprehensive (loss) income$(27,720)$19,025 
See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2023
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Shares
at $.01
CapitalEarningsSharesAmountLoss Total
Balance at June 30, 2023111,339 $1,113 $1,217,549 $652,561 21,864 $(727,100)$(126,216)$1,017,907 
Net loss(10,376)(10,376)
Other comprehensive loss(29,407)(29,407)
Issuance of common stock pursuant to stock-based compensation plans
239 3 3 
Employee shares withheld for taxes
86 (875)(875)
Stock-based compensation expense3,742 3,742 
Balance at September 30, 2023111,578 $1,116 $1,221,291 $642,185 21,950 $(727,975)$(155,623)$980,994 
Net loss(13,535)(13,535)
Other comprehensive income 25,598 25,598 
Issuance of common stock pursuant to stock-based compensation plans
240 2 2 
Employee shares withheld for taxes
56 (614)(614)
Stock-based compensation expense3,376 3,376 
Balance at December 31, 2023111,818 $1,118 $1,224,667 $628,650 22,006 $(728,589)$(130,025)$995,821 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2022
(In thousands, except par values)
 Common StockAdditional   
Accumulated
Other
 
  AmountPaid-inRetainedTreasury StockComprehensive 
 Shares
at $.01
CapitalEarningsSharesAmountLossTotal
Balance at June 30, 2022111,090 $1,111 $1,203,126 $769,098 21,788 $(725,685)$(164,482)$1,083,168 
Net income6,923 6,923 
Other comprehensive loss(52,462)(52,462)
Issuance of common stock pursuant to stock-based compensation plans
24 1 1 
Employee shares withheld for taxes
10 (229)(229)
Stock-based compensation expense3,994 3,994 
Balance at September 30, 2022111,114 $1,112 $1,207,120 $776,021 21,798 $(725,914)$(216,944)$1,041,395 
Net income10,966 10,966 
Other comprehensive income53,598 53,598 
Issuance of common stock pursuant to stock-based compensation plans
142 1 1 
Employee shares withheld for taxes
39 (754)(754)
Stock-based compensation expense3,435 3,435 
Balance at December 31, 2022111,256 $1,113 $1,210,555 $786,987 21,837 $(726,668)$(163,346)$1,108,641 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In thousands)
 Six Months Ended December 31,
 20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income$(23,911)$17,889 
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization23,502 24,125 
Deferred income taxes(16,791)(1,983)
Equity in net loss of equity-method investees1,405 698 
Stock-based compensation, net7,118 7,429 
Long-lived asset impairment21,360 340 
Loss (gain) on sale of assets62 (3,395)
Other non-cash items, net965 (2,505)
(Decrease) increase in cash attributable to changes in operating assets and liabilities:
Accounts receivable(30,647)(6,536)
Inventories15,166 (18,629)
Other current assets4,882 (331)
Other assets and liabilities(2,576)4,178 
Accounts payable and accrued expenses34,150 (23,932)
Net cash provided by (used in) operating activities34,685 (2,652)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment(12,735)(14,055)
Investments and joint ventures, net 433 
Proceeds from sale of assets1,332 7,608 
Net cash used in investing activities
(11,403)(6,014)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under bank revolving credit facility122,000 185,000 
Repayments under bank revolving credit facility(137,000)(191,000)
Repayments under term loan(3,750)(3,750)
Payments of other debt, net(3,854)(159)
Employee shares withheld for taxes
(1,489)(983)
Net cash used in financing activities
(24,093)(10,892)
Effect of exchange rate changes on cash1,119 (2,517)
Net increase (decrease) in cash and cash equivalents308 (22,075)
Cash and cash equivalents at beginning of period53,364 65,512 
Cash and cash equivalents at end of period$53,672 $43,437 

See notes to consolidated financial statements.
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THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands, except par values and per share data)

1.    BUSINESS

The Hain Celestial Group, Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “Hain Celestial,” “we,” “us” or “our”), was founded in 1993 and is headquartered in Hoboken, New Jersey. The Company’s mission has continued to evolve since its founding, with health and wellness being the core tenet. 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. 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. The Company operates under two reportable segments: North America and International.

2.    BASIS OF PRESENTATION

The Company’s unaudited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliated companies in which the Company exerts significant influence, but which it does not control, are accounted for under the equity method of accounting. As such, consolidated net (loss) income includes the Company’s equity in the current losses or earnings of such companies.

The Companys unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “Form 10-K”). The amounts as of and for the periods ended June 30, 2023 are derived from the Company’s audited annual financial statements. The unaudited consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair presentation for interim periods. Operating results for the three and six months ended December 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. Please refer to the Notes to the Consolidated Financial Statements as of June 30, 2023 and for the fiscal year then ended included in the Form 10-K for information not included in these condensed notes.

All amounts in the unaudited consolidated financial statements, notes and tables have been rounded to the nearest thousands, except par values and per share amounts, unless otherwise indicated.

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation.

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Practices, in the Notes to the Consolidated Financial Statements in the Form 10-K. Included herein are certain updates to those policies.

Transfer of Financial Assets

The Company accounts for transfers of financial assets, such as non-recourse accounts receivable financing arrangements, when the Company has surrendered control over the related assets. Determining whether control has transferred requires an evaluation of relevant legal considerations, an assessment of the nature and extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. The Company has non-recourse financing arrangements in which eligible receivables are sold to third-party buyers in exchange for cash. The Company transferred accounts receivable in their entirety to the buyers and satisfied all of the conditions to report the transfer of financial assets in their entirety as a sale. The principal amount of receivables sold under these arrangements was $159,760 and $189,794 during the six months ended December 31, 2023 and 2022, respectively. The incremental cost of financing receivables under these arrangements is included in selling, general and administrative expenses on the Company’s Consolidated Statements of Operations. The proceeds from the sale of receivables are included in cash provided by operating activities on the Consolidated Statements of Cash Flows.

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Recently Issued and Adopted Accounting Pronouncements

In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, “Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The Company adopted this conforming guidance upon issuance, which had no material impact on its condensed consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which will require entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction, pretax income (loss) from continuing operations, and income tax expense (benefit). The amendments are effective for fiscal years beginning after December 15, 2024 and for interim periods within fiscal years beginning after December 15, 2025. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures”, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of the amendments and the effect on its future consolidated financial statements.

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3.    (LOSS) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share on the Consolidated Statements of Operations:
 Three Months Ended December 31,Six Months Ended December 31,
 2023202220232022
Numerator:
Net (loss) income$(13,535)$10,966 $(23,911)$17,889 
Denominator:
Basic weighted average shares outstanding
89,811 89,380 89,661 89,343 
Effect of dilutive stock options, unvested restricted stock and unvested restricted share units
 198  192 
Diluted weighted average shares outstanding
89,811 89,578 89,661 89,535 
Basic net (loss) income per common share$(0.15)$0.12 $(0.27)$0.20 
Diluted net (loss) income per common share$(0.15)$0.12 $(0.27)$0.20 

Due to the incurred net loss in the three and six months ended December 31, 2023, all common stock equivalents such as stock options and unvested restricted stock awards have been excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive.

There were 372 restricted stock awards excluded from the calculation of diluted net income per share for the three months ended December 31, 2022, as such awards were anti-dilutive. There were 453 stock-based awards comprised of restricted stock awards and stock options excluded from the calculation of diluted net income per share for the six months ended December 31, 2022, as such awards were anti-dilutive.

Additionally, 903 and 401 stock-based awards outstanding at December 31, 2023 and 2022, respectively, were excluded from the calculation of diluted net (loss) income per share for the three months ended December 31, 2023 and 2022, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods. Furthermore, 515 and 286 stock-based awards outstanding at December 31, 2023 and 2022, respectively, were excluded from the calculation of diluted net (loss) income per share for the six months ended December 31, 2023 and 2022, respectively, as such awards were contingently issuable based on market or performance conditions, and such conditions had not been achieved during the respective periods.

4.     DISPOSITION

Westbrae Natural®

On December 15, 2022, the Company completed the divestiture of its Westbrae Natural® brand (“Westbrae”) for total cash consideration of $7,498. The sale of Westbrae is consistent with the Company’s portfolio simplification process. Westbrae operated in the United States and was part of the Company’s North America reportable segment. During the six months ended December 31, 2022, the Company deconsolidated the net assets of Westbrae, primarily consisting of $3,054 of goodwill, and recognized a pretax gain on sale of $3,359.

5.    INVENTORIES

Inventories consisted of the following:
December 31,
2023
June 30,
2023
Finished goods$185,160 $192,007 
Raw materials, work-in-progress and packaging110,116 118,334 
$295,276 $310,341 


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6.    PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:
December 31,
2023
June 30,
2023
Land$11,482 $11,453 
Buildings and improvements56,364 55,354 
Machinery and equipment322,597 335,912 
Computer hardware and software53,303 54,192 
Furniture and fixtures20,144 20,722 
Leasehold improvements39,785 49,394 
Construction in progress16,919 10,816 
520,594 537,843 
Less: Accumulated depreciation247,143 241,518 
$273,451 $296,325 

Depreciation expense for the three months ended December 31, 2023 and 2022 was $8,352 and $8,195, respectively. Depreciation expense for the six months ended December 31, 2023 and 2022 was $18,178 and $16,262, respectively.

As a result of a decline in actual and projected performance and cash flows related to an asset group primarily comprised of certain production assets in the North America reportable segment, the Company determined that an interim impairment test of the asset group was required to be performed. The fair value was determined using a discounted cash flow analysis. During the three and six months ended December 31, 2023, the Company recognized a non-cash impairment charge of $20,666 to reduce the carrying value of such long-lived assets to their estimated fair value. Impairment charges were recorded within long-lived asset impairment on the Consolidated Statement of Operations.

During the six months ended December 31, 2022, the Company recognized a non-cash impairment charge of $340 relating to a facility in the United States that was held for sale. During the six months ended December 31, 2023, the Company completed the sale of such facility for total cash proceeds of $1,182, net of brokerage and other fees, resulting in a loss in the amount of $68, which was included as a component of other income, net on the Consolidated Statement of Operations.


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7.    LEASES
The Company leases office space, warehouse and distribution facilities, manufacturing equipment and vehicles primarily in North America and Europe. The Company determines if an arrangement is or contains a lease at inception. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company’s lease agreements generally do not contain residual value guarantees or material restrictive covenants. Some of the Company’s leases contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index changes are recorded as variable lease expense in the period incurred. The Company does not have any related party leases, and sublease transactions are de minimis.

The components of lease expenses for the three and six months ended December 31, 2023 and 2022 were as follows:
Three Months EndedSix Months Ended
December 31, 2023December 31, 2022December 31, 2023December 31, 2022
Operating lease expenses$4,796 $2,238 $9,374 $7,213 
Finance lease expenses37 71 74 140 
Variable lease expenses190 169 372 349 
Short-term lease expenses418 390 813 886 
Total lease expenses$5,441 $2,868 $10,633 $8,588 


Supplemental balance sheet information related to leases was as follows:

LeasesClassification December 31, 2023June 30, 2023
Assets
Operating lease ROU assets, netOperating lease right-of-use assets, net$91,388 $95,894 
Finance lease ROU assets, netProperty, plant and equipment, net247289 
Total leased assets$91,635 $96,183 
Liabilities
Current
OperatingAccrued expenses and other current liabilities$10,598 $10,489 
FinanceCurrent portion of long-term debt85 83 
Non-current
Operating Operating lease liabilities, noncurrent portion86,022 90,014 
FinanceLong-term debt, less current portion179 222 
Total lease liabilities $96,884 $100,808 


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Additional information related to leases is as follows:
Six Months Ended
December 31, 2023December 31, 2022
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,728 $8,173 
Operating cash flows from finance leases$6 $9 
Financing cash flows from finance leases$39 $106 
ROU assets obtained in exchange for lease obligations:
Operating leases(1)(2)
$2,140 $(4,764)
Finance leases$ $60 
Weighted average remaining lease term:
Operating leases9.3 years10.7 years
Finance leases3.4 years4.1 years
Weighted average discount rate:
Operating leases4.9 %4.7 %
Finance leases4.5 %4.6 %

(1) Includes adjustment for remeasurement of an operating lease during the three months ended December 31, 2023, which resulted in a net reduction of an ROU asset and a corresponding reduction in lease liability of $9,375.

(2) Includes adjustment for modification of an operating lease during the three months ended December 31, 2022, which resulted in a reduction of an ROU asset and lease liability of $13,876 and $17,244, respectively, and recognition of a gain of $3,368 related to the modification.

Maturities of lease liabilities as of December 31, 2023 were as follows:
Fiscal YearOperating leasesFinance leasesTotal
2024 (remainder of year)$7,786 $47 $7,833 
202514,486 93 14,579 
202613,815 68 13,883 
202713,483 53 13,536 
202813,233 25 13,258 
Thereafter57,832  57,832 
Total lease payments120,635 286 120,921 
Less: Imputed interest24,015 22 24,037 
Total lease liabilities$96,620 $264 $96,884 

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8.    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table provides changes in the carrying value of goodwill by reportable segment:
North AmericaInternationalTotal
Balance as of June 30, 2023$697,053 $241,587 $938,640 
Translation(3)924 921 
Balance as of December 31, 2023
$697,050 $242,511 $939,561 

Other Intangible Assets

The following table includes the gross carrying amount and accumulated amortization, where applicable, for intangible assets, excluding goodwill:
December 31,
2023
June 30,
2023
Non-amortized intangible assets:
Trademarks and tradenames(1)
$251,199 $250,860 
Amortized intangible assets:
Other intangibles162,191 161,874 
Less: Accumulated amortization(118,379)(114,629)
Net amortized intangible assets43,812 47,245 
Net other intangible assets$295,011 $298,105 

(1) The gross carrying value of trademarks and tradenames is reflected net of $223,981 of accumulated impairment charges as of December 31, 2023 and June 30, 2023.

Amortized intangible assets, which are deemed to have a finite life, primarily consist of customer relationships, trademarks and tradenames and are amortized over their estimated useful lives of 7 to 25 years.

Amortization expense included in the Consolidated Statements of Operations was as follows:

Three Months Ended December 31,Six Months Ended December 31,
 2023202220232022
Amortization of acquired intangibles$1,509 $2,785 $3,464 $5,573 

Expected amortization expense over the next five fiscal years is as follows:
Fiscal Year Ending June 30,
2024 (remainder of year)20252026202720282029
Estimated amortization expense$2,836 $5,477 $5,083 $4,996 $4,113 $3,615 

The weighted average remaining amortization period of amortized intangible assets is 10.9 years.

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9.    DEBT AND BORROWINGS

Debt and borrowings consisted of the following:
December 31,
2023
June 30,
2023
Revolving credit facility$526,000 $541,000 
Term loans285,000 288,750 
Less: Unamortized issuance costs(2,020)(1,307)
Other borrowings(1)
264 305 
809,244 828,748 
Short-term borrowings and current portion of long-term debt(2)
7,569 7,567 
Long-term debt, less current portion$801,675 $821,181 

(1) Includes $264 (June 30, 2023: $305) of finance lease obligations as discussed in Note 7, Leases.
(2) Includes $85 (June 30, 2023: $83) of short-term finance lease obligations as discussed in Note 7, Leases.

On August 22, 2023, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement (as amended by a First Amendment dated December 16, 2022, the “Credit Agreement”). The Credit Agreement provides for senior secured financing of $1,100 million in the aggregate, consisting of (1) $300 million in aggregate principal amount of term loans (the “Term Loans”) and (2) an $800 million senior secured revolving credit facility (which includes borrowing capacity available for letters of credit, and is comprised of a $440 million U.S. revolving credit facility and $360 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 interest coverage ratio, a consolidated leverage ratio and a consolidated secured leverage ratio. 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 and 5.00:1.00 until December 31, 2024 (the period of time during which such maximum consolidated secured leverage ratios are in effect, the “Second Amendment Period,” which the Company may elect to end early). Following the Second Amendment Period, the maximum consolidated secured leverage ratio will be 4.25:1.00, subject to possible temporary increase following certain corporate acquisitions. Pursuant to the Second Amendment, the Company’s minimum interest coverage ratio was amended to be 2.50:1.00.

During the Second Amendment Period, loans under the Credit Agreement will bear interest at (a) Term SOFR plus 2.5% per annum or (b) the Base Rate plus 1.5% per annum. Following the Second Amendment Period, Loans will bear interest at rates based on (a) Term SOFR plus a rate ranging from 1.125% to 2.0% per annum or (b) the Base Rate plus a rate ranging from 0.125% to 1.0% per annum, the relevant rate in each case being the Applicable Rate. The Applicable Rate following the Second Amendment Period will be determined in accordance with a leverage-based pricing grid, as set forth in the Credit Agreement as amended by the Second Amendment. Excluding hedge impact, the weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2023 was 7.90%. 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 December 31, 2023, the notional amount of the interest rate swaps was $400,000 with fixed rate payments of 5.60%. Including hedge impact, the weighted average interest rate on outstanding borrowings under the Credit Agreement at December 31, 2023 was 6.81%. Additionally, the Credit Agreement contains a Commitment Fee (as defined in the Credit Agreement) on the amount unused under the Credit Agreement ranging from 0.15% to 0.25% per annum, and such Commitment Fee is determined in accordance with a leverage-based pricing grid.

As of December 31, 2023, there were $526,000 of loans under the Revolver, $285,000 of Term Loans, and $3,188 of letters of credit outstanding under the Credit Agreement. As of December 31, 2023, $270,812 was available under the Credit Agreement, subject to compliance with the financial covenants. As of December 31, 2023, the Company was in compliance with all associated covenants.

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Credit Agreement Issuance Costs

In connection with the First Amendment to its Credit Agreement during the second quarter of fiscal year 2023, the Company incurred debt issuance costs of approximately $1,987, of which $1,916 was deferred. Of the total deferred costs, $1,396 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on the Consolidated Balance Sheets, and $520 are being amortized on a straight-line basis, which approximates the effective interest method, as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net over the term of the Credit Agreement.

In connection with the Second Amendment to its Credit Agreement during the first quarter of fiscal year 2024, the Company incurred debt issuance costs of approximately $3,854, of which $3,813 was deferred. Of the total deferred costs, $2,802 were associated with the Revolver and are being amortized on a straight-line basis within Other assets on the Consolidated Balance Sheets, and $1,011 are being recorded as an adjustment to the carrying amount of the Term Loans as a component of Interest and other financing expense, net over the term of the Credit Agreement utilizing the effective interest rate method.

Interest paid during the three and six months ended December 31, 2023 was $15,956 and $27,388, respectively. Interest paid during the three and six months ended December 31, 2022 was $9,378 and $16,066, respectively.


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10.    INCOME TAXES

In general, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. The Company’s effective tax rate may change from period-to-period based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes and tax audit settlements.

The effective income tax rate was a benefit of 25.2% and an expense of 36.0% for the three months ended December 31, 2023 and 2022, respectively. The effective income tax rate was a benefit of 30.0% and an expense of 32.6% for the six months ended December 31, 2023 and 2022, respectively. The effective income tax rate for the six months ended December 31, 2023 was impacted by tax expense related to stock-based compensation, global intangible low-taxed income, and limitations on the deductibility of executive compensation. The effective income tax rate for the six months ended December 31, 2022 was impacted by the gain on the sale of Westbrae, an operating lease modification during the second quarter, severance with respect to our former CEO (as part of the limitation on the deductibility of executive compensation), stock-based compensation and uncertain tax positions. The effective income tax rates in each period were also impacted by the geographical mix of earnings and state income taxes.
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11.     ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss (“AOCL”):

Foreign Currency Translation Adjustment, NetDeferred Gains on Cash Flow Hedging Instruments, NetDeferred Gains on Fair Value Hedging Instruments, NetDeferred Gains (Losses) on Net Investment Hedging Instruments, NetTotal
Balance at June 30, 2022$(168,225)$519 $500 $2,724 $(164,482)
Other comprehensive (loss) income before reclassifications (67,149)11,360 1,145 4,666 (49,978)
Amounts reclassified into income (767)(1,348)(369)(2,484)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2022(1)
(67,149)10,593 (203)4,297 (52,462)
Balance at September 30, 2022(235,374)11,112 297 7,021 (216,944)
Other comprehensive income (loss) before reclassifications59,674 (454)(1,067)(4,359)53,794 
Amounts reclassified into (income) expense (1,411)1,588 (373)(196)
Net change in accumulated other comprehensive income (loss) for the three months ended December 31, 2022(1)
59,674 (1,865)521 (4,732)53,598 
Balance at December 31, 2022$(175,700)$9,247 $818 $2,289 $(163,346)
Balance at June 30, 2023$(138,028)$10,898 $685 $229 $(126,216)
Other comprehensive (loss) income before reclassifications(32,933)4,159 430 1,741 (26,603)
Amounts reclassified into income (1,715)(717)(372)(2,804)
Net change in accumulated other comprehensive (loss) income for the three months ended September 30, 2023(1)
(32,933)2,444 (287)1,369 (29,407)
Balance at September 30, 2023(170,961)13,342 398 1,598 (155,623)
Other comprehensive income (loss) before reclassifications36,536 (5,806)(738)(2,995)26,997 
Amounts reclassified into (income) expense (1,801)774 (372)(1,399)
Net change in accumulated other comprehensive income (loss) for the three months ended December 31, 2023(1)
36,536 (7,607)36 (3,367)25,598 
Balance at December 31, 2023$(134,425)$5,735 $434 $(1,769)$(130,025)

(1)See Note 15, Derivatives and Hedging Activities, for the amounts reclassified into income for deferred gains on hedging instruments recorded in the Consolidated Statements of Operations during the three and six months ended December 31, 2023 and 2022.


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12.    STOCK-BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

Under the Companys Amended and Restated 2002 Long-Term Incentive and Stock Award Plan (the “2002 Plan”), the Company historically granted equity-based awards to its officers, senior management, other key employees, consultants, and directors. The Company currently utilizes a stockholder-approved plan, The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan (the “2022 Plan”) which was approved at the Company’s 2022 Annual Meeting of Stockholders held on November 17, 2022. The 2022 Plan permits the Company to continue making equity-based and other incentive awards in a manner intended to properly incentivize its employees, directors, consultants and other service providers by aligning their interests with the interests of the Company’s stockholders. The Company also historically granted shares under its 2019 Equity Inducement Award Program (the “2019 Inducement Program”) to induce selected individuals to become employees of the Company. The 2002 Plan, the 2022 Plan and the 2019 Inducement Program are collectively referred to as the “Stock Award Plans.” In conjunction with the Stock Award Plans, the Company maintains a long-term incentive program (the “LTI Program” or “LTIP”) that provides for equity awards, including performance and market-based equity awards that can be earned over defined performance periods. The Company’s LTIP plans, with the exception of the 2023 - 2025 LTIP described below, are described in Note 13, Stock-Based Compensation and Incentive Performance Plans, in the Notes to the Consolidated Financial Statements in the Form 10-K.

Compensation cost and related income tax benefits recognized in the Consolidated Statements of Operations for stock-based compensation plans were as follows:
  Three Months Ended December 31,Six Months Ended December 31,
 2023202220232022
Selling, general and administrative expenses
$3,376 $3,435 $7,118 $7,429 
Related income tax benefit$398 $552 $854 $954 

Restricted Stock

Awards of restricted stock are either restricted stock awards (“RSAs”) or restricted stock units (“RSUs”) that are issued at no cost to the recipient. Performance-based or market-based RSUs are issued in the form of performance share units (“PSUs”). A summary of the restricted stock activity (including all RSAs, RSUs and PSUs) for the six months ended December 31, 2023 is as follows:
Number of Shares
and Units
Weighted
Average Grant
Date Fair 
Value (per share)
Non-vested RSAs, RSUs and PSUs outstanding at June 30, 20231,288 $26.37 
Granted1,562 $12.34 
Vested(479)$28.67 
Forfeited(114)$25.85 
Non-vested RSAs, RSUs and PSUs outstanding at December 31, 20232,257 $15.79 

Shares granted during the six months ended December 31, 2023 related to shares of RSUs and PSUs granted under the 2024 - 2026 LTIP. Vested shares during the six months ended December 31, 2023 include a total of 15 shares related to certain performance-based metrics being met and a total of 463 shares related to service-based RSUs. There are market-based PSU awards outstanding under 2024 - 2026 LTIP, 2023 – 2025 LTIP and the 2022 – 2024 LTIP. At December 31, 2023, 576 of such shares were outstanding under the 2024 – 2026 LTIP, 276 of such shares were outstanding under the 2023 – 2025 LTIP while 51 shares were outstanding under the 2022 – 2024 LTIP.

The fair value of RSAs, RSUs and PSUs granted and of shares vested, and the tax benefit recognized from restricted shares vesting was as follows:
Six Months Ended December 31,
20232022
Fair value of RSAs, RSUs and PSUs granted$19,286 $21,457 
Fair value of shares vested$5,081 $3,317 
Tax benefit recognized from restricted shares vesting$650 $502 
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At December 31, 2023, there was $27,305 of unrecognized stock-based compensation expense related to non-vested restricted stock awards which is expected to be recognized over a weighted average period of 2.3 years.

2024-2026 LTIP

During the six months ended December 31, 2023, the Company granted market-based PSU awards under the LTIP with a total target payout of 578 shares of common stock. At December 31, 2023, there were 576 such shares outstanding under the LTIP. Such PSU awards will vest, if at all, pursuant to a defined calculation of either relative TSR or absolute TSR (as defined) over the period from October 25, 2023 through the earlier of (i) October 25, 2026; (ii) the date the participant’s employment is terminated due to death or Disability (as defined); or (iii) the effective date of a Change in Control (as defined) (the “2024 TSR Performance Period”). Vesting of 384 target shares of the outstanding PSU awards is pursuant to a defined calculation of relative TSR over the 2024 TSR Performance Period (the “2024 Relative TSR PSUs”). Vesting of 192 target shares of the outstanding PSU awards is pursuant to the achievement of pre-established three-year compound annual TSR targets over the 2024 TSR Performance Period (the “2024 Absolute TSR PSUs”). Total shares eligible to vest for both the 2024 Relative TSR PSUs and 2024 Absolute TSR PSUs range from zero to 200% of the target amount. Grant date fair values are calculated using a Monte Carlo simulation model with grant date fair values per target share and related valuation assumptions as follows:

Absolute TSR PSUsRelative TSR PSUs
Grant date fair value (per target share)$12.23$15.42
Risk-free interest rate4.98 %4.98 %
Expected dividend yield
Expected volatility33.70 %23.10 %
Expected term3.00 years3.00 years

CEO Succession

On November 22, 2022, the Board approved a succession plan pursuant to which 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”). As of the Transition Date, certain of Mr. Schiller's stock-based compensation awards were modified and others were forfeited. Additionally, Mr. Schiller will receive severance totaling $4,725, paid in installments over a two-year period following the Transition Date. Severance, including payroll taxes and other costs, was recognized during the three and six months ended December 31, 2022.

13.    INVESTMENTS

On October 27, 2015, the Company acquired a minority equity interest in Chop’t Creative Salad Company LLC, predecessor to Founders Table Restaurant Group, LLC (“Founders Table”). Founders Table owns and operates the fast-casual restaurant chains Chop’t Creative Salad Co. and Dos Toros Taqueria. The investment is being accounted for as an equity method investment due to the Company’s representation on the Board of Directors of Founders Table. At December 31, 2023 and June 30, 2023, the carrying value of the Company’s investment in Founders Table was $6,878 and $8,032, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.

The Company also holds an investment in Hutchison Hain Organic Holdings Limited, a joint venture with HUTCHMED (China) Limited, accounted for under the equity method of accounting. The carrying value of the remaining investments were $4,533 and $4,766 as of December 31, 2023 and June 30, 2023, respectively, and is included in the Consolidated Balance Sheets as a component of Investments and joint ventures.



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14.    FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities measured at fair value are required to be grouped in one of three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2023: 

Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$10,127 $ $10,127 $ 
Liabilities:
Derivative financial instruments$6,487 $ $6,487 $ 

The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2023:
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets:
Derivative financial instruments$16,988 $ $16,988 $ 
Liabilities:
Derivative financial instruments$3,160 $ $3,160 $ 

There were no transfers of financial instruments between the three levels of fair value hierarchy during the six months ended December 31, 2023 or 2022.

Derivative Instruments

The Company uses interest rate swaps to manage its interest rate risk and cross-currency swaps and foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency exchange rates. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriate