ROSEVILLE, Minn., July 30, 2025 (GLOBE NEWSWIRE) -- Hawkins, Inc. (Nasdaq: HWKN) today announced results for the three months ended June 29, 2025, its first quarter of fiscal 2026.
First Quarter Fiscal Year 2026 Highlights:
- Record quarterly results for revenue, gross profit, operating income, net income, diluted earnings per share ("EPS") and adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("adjusted EBITDA"), a non-GAAP measure.
- Revenue growth of 15%, including Water Treatment segment growth of 28% over the same period of the prior year.
- Gross profit increase of 12% over the same period of the prior year.
- Diluted EPS of $1.40 per share, an increase of $0.02, or 1%. Assuming the acquisition of WaterSurplus had occurred at the beginning of the applicable periods, pro forma EPS would have been 11% higher than the pro forma prior year period.
- Adjusted EBITDA, a non-GAAP measure, of $57.6 million, a 13% increase over the same period of the prior year. Trailing 12-month adjusted EBITDA exceeded $170 million.
- As previously announced, closed on the strategic acquisition of WaterSurplus, bringing new capabilities in design, engineering and filtration systems within the Water Treatment segment.
- For the fifth year in a row, Hawkins was certified as a Great Place to Work.
Executive Commentary - Patrick H. Hawkins, Chief Executive Officer and President:
"Our first quarter results came in as expected, with Water Treatment having another strong quarter with revenue growth of 28%, despite a cooler and wet start to the summer," said Patrick Hawkins, Chief Executive Officer and President. "Our record revenue of $293 million was the result of all three reporting segments growing year over year and for the first time in our history, Hawkins crossed the $1 billion revenue mark for the trailing twelve months. Our continuing strategy of investing in higher margin business helped drive the growth and record results we have experienced this quarter as well as over the last several years. Our double-digit growth in revenue and adjusted EBITDA, along with our strong cash flow, has allowed us to focus on growth while maintaining a strong balance sheet. This could not be accomplished without the commitment of each and every one of our employees and I am extremely proud of the entire Hawkins team and the contributions they make to the success of our company."
Mr. Hawkins, continued, "We closed on the acquisition of WaterSurplus in the quarter, one of our largest acquisitions in company history. We are excited about the growth opportunities this acquisition presents us. By combining Hawkins' chemistry, service, and technical expertise with WaterSurplus' design, engineering, and filtration systems, Hawkins now has a full-service equipment and chemical offering for water treatment customers throughout the United States. Our balance sheet continues to be strong, and our leverage ratio at the end of the first quarter was 1.6x. Looking to the future, we expect all three segments to continue to grow profitability for fiscal 2026. We will continue to deliver on our strategy of investing in our higher margin businesses, while servicing the needs of our customers to the highest level possible."
Change in Reporting Segments
Starting in the first quarter of fiscal 2026, we aligned our reporting segments to better reflect organization changes made to our business and how we plan to manage our operations and allocate resources going forward. We now report on the following segments: Water Treatment, Food and Health Sciences, and Industrial Solutions. There is no change in how Water Treatment is managed. Food and Health Sciences includes our Nutrition, Food, Agriculture, and Pharmaceutical businesses. Food, Agriculture, and Pharmaceutical had previously been included within the Industrial reporting segment. The investor relations page on our website contains recast historical segment information.
First Quarter Financial Highlights:
NET INCOME
For the first quarter of fiscal 2026, the Company reported net income of $29.2 million, or $1.40 per diluted share, compared to net income for the first quarter of fiscal 2025 of $28.9 million, or $1.38 per diluted share.
REVENUE
Sales were $293.3 million for the first quarter of fiscal 2026, an increase of $37.4 million, or 15%, from sales of $255.9 million in the same period a year ago. Each of our segments contributed to the year-over-year growth.
Water Treatment segment sales increased $32.4 million, or 28%, to $149.6 million for the current quarter, from $117.2 million in the same period a year ago. Water Treatment sales increased as a result of $29 million of added sales from our acquired businesses as well as increased sales volumes and improved pricing on certain products in our legacy business.
Food & Health Sciences segment sales increased $4.1 million, or 5%, to $89.2 million for the current quarter, from $85.1 million in the same period a year ago. Sales of our agricultural products increased $4.5 million due to increased volumes, offset partially by declines in our other product lines as a result of lower selling prices driven by competitive pricing pressures.
Industrial Solutions segment sales increased $0.9 million, or 2%, to $54.5 million for the current quarter, from $53.6 million in the same period a year ago. Industrial Solutions sales increased primarily as a result of increased sales volumes of certain of our manufactured, blended and repackaged products.
GROSS PROFIT
Gross profit increased $7.7 million, or 12%, to $72.4 million, or 25% of sales, for the current quarter, from $64.7 million, or 25% of sales, in the same period a year ago. During the current quarter, the LIFO reserve increased, and gross profit decreased, by $0.6 million, primarily due to a projected increase in inventory costs and year-end inventory quantities. In the same quarter a year ago, the LIFO reserve increased, and gross profit decreased, by $0.4 million.
Gross profit for the Water Treatment segment increased $8.5 million, or 24%, to $43.7 million, or 29% of sales, for the current quarter, from $35.2 million, or 30% of sales, in the same period a year ago. Water Treatment segment gross profit increased primarily as a result of increased sales from our acquired businesses. Step-up inventory adjustments of $0.8 million related to the WaterSurplus acquisition negatively impacted gross profit.
Gross profit for the Food & Health Sciences segment decreased $0.6 million, or 3%, to $19.3 million, or 22% of sales, for the current quarter, from $19.9 million, or 23% of sales, in the same period a year ago. Food & Health Sciences gross profit decreased primarily as a result of lower selling prices as a result of competitive pricing pressures.
Gross profit for our Industrial Solutions segment decreased $0.2 million, or 2%, to $9.3 million, or 17% of sales, for the current quarter, from $9.5 million, or 18% of sales, in the same period a year ago. Industrial Solutions segment gross profit decreased primarily as a result of competitive pricing pressures and increased operating costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative ("SG&A") expenses increased $6.1 million, or 24%, to $31.0 million, or 11% of sales, for the current quarter, from $24.9 million, or 10% of sales, in the same period a year ago. Expenses increased largely due to $4.9 million in added costs from the acquired business in our Water Treatment segment, including amortization of intangibles of $2.0 million and $0.9 million of acquisition costs. In addition, expenses increased due to $1.4 million of additional compensation expense related to our non-qualified deferred compensation plan and equity compensation adjustments due to stock market increases, as well as an increase in medical expenses. The non-qualified deferred compensation expense increase of $0.8 million was offset in Other Income. In the current quarter, we recorded a reduction to SG&A expense of $1.9 million related to the adjustment of the fair value accretion of the earnout from the Water Solutions acquisition due to a change in projections. SG&A expenses also increased due to increases in other variable costs, including variable pay and other personnel costs.
ADJUSTED EBITDA
Adjusted EBITDA, a non-GAAP financial measure, is an important performance indicator and a key compliance measure under the terms of our credit agreement. An explanation of the computation of adjusted EBITDA is presented below. Adjusted EBITDA for the three months ended June 29, 2025 was $57.6 million, an increase of $6.7 million, or 13%, from $50.9 million in the same period a year ago.
INCOME TAXES
Our effective income tax rate was 25% for both the current quarter and for the same period a year ago. The effective tax rate in both periods was impacted by favorable tax provision adjustments recorded. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes. Our effective tax rate for the full year is currently expected to be approximately 26-27%.
BALANCE SHEET
As of June 29, 2025, our working capital was $22 million higher than the end of fiscal 2025 due primarily to increased inventories and receivables. During the quarter, we borrowed a net $150 million on our line of credit to fund the acquisition of WaterSurplus. Our total debt outstanding at the end of the first quarter was $299.0 million and our leverage ratio was 1.61x our trailing 12-month proforma adjusted EBITDA, as compared to 0.86x of trailing twelve-month adjusted EBITDA at the end of fiscal 2025.
About Hawkins, Inc.
Hawkins, Inc. was founded in 1938 and is a leading water treatment and specialty ingredients company that formulates, manufactures, distributes, and blends products for its Water Treatment, Food & Health Sciences, and Industrial Solutions customers. Headquartered in Roseville, Minnesota, the Company has 64 facilities in 28 states and creates value for its customers through superb customer service and support, quality products and personalized applications. Hawkins, Inc. generated $974 million of revenue in fiscal 2025 and has approximately 1,100 employees. For more information, including registering to receive email alerts, please visit www.hawkinsinc.com/investors.
Reconciliation of Non-GAAP Financial Measures
We report our consolidated financial results in accordance with U.S. generally accepted accounting principles (GAAP). To assist investors in understanding our financial performance between periods, we have provided certain financial measures not computed according to GAAP, including adjusted EBITDA. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies.
Management uses this non-GAAP financial measure internally to understand, manage and evaluate our business and to make operating decisions. Management believes that this non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our financial condition and results of operations.
We define adjusted EBITDA as GAAP net income adjusted for the impact of the following: net interest expense resulting from our net borrowing position; income tax expense; non-cash expenses including amortization of intangibles, depreciation and charges for the employee stock purchase plan and restricted stock grants; and non-recurring items of income or expense, if applicable.
| Adjusted EBITDA | Three Months Ended | |||||||
| (In thousands) | June 29, 2025 | June 30, 2024 | ||||||
| Net Income (GAAP) | $ | 29,175 | $ | 28,879 | ||||
| Interest expense, net | 3,269 | 1,263 | ||||||
| Income tax expense | 9,831 | 9,808 | ||||||
| Amortization of intangibles | 4,821 | 2,802 | ||||||
| Depreciation expense | 7,470 | 6,527 | ||||||
| Non-cash compensation expense | 2,212 | 1,467 | ||||||
| Non-recurring acquisition expenses | 870 | 188 | ||||||
| Adjusted EBITDA | $ | 57,648 | $ | 50,934 | ||||
| HAWKINS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except share and per-share data) | ||||||||
| Three Months Ended | ||||||||
| June 29, 2025 | June 30, 2024 | |||||||
| Sales | $ | 293,272 | $ | 255,879 | ||||
| Cost of sales | (220,910 | ) | (191,224 | ) | ||||
| Gross profit | 72,362 | 64,655 | ||||||
| Selling, general and administrative expenses | (31,029 | ) | (24,864 | ) | ||||
| Operating income | 41,333 | 39,791 | ||||||
| Interest expense, net | (3,269 | ) | (1,263 | ) | ||||
| Other income | 942 | 159 | ||||||
| Income before income taxes | 39,006 | 38,687 | ||||||
| Income tax expense | (9,831 | ) | (9,808 | ) | ||||
| Net income | $ | 29,175 | $ | 28,879 | ||||
| Weighted average number of shares outstanding - basic | 20,717,485 | 20,816,479 | ||||||
| Weighted average number of shares outstanding - diluted | 20,810,562 | 20,914,085 | ||||||
| Basic earnings per share | $ | 1.41 | $ | 1.39 | ||||
| Diluted earnings per share | $ | 1.40 | $ | 1.38 | ||||
| Cash dividends declared per common share | $ | 0.18 | $ | 0.16 | ||||
| HAWKINS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) | ||||||||
| June 29, 2025 | March 30, 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 14,502 | $ | 5,103 | ||||
| Trade accounts receivables, net | 140,107 | 131,795 | ||||||
| Inventories | 95,716 | 83,512 | ||||||
| Income taxes receivable | - | 2,864 | ||||||
| Prepaid expenses and other current assets | 6,098 | 7,417 | ||||||
| Total current assets | 256,423 | 230,691 | ||||||
| PROPERTY, PLANT, AND EQUIPMENT: | 444,716 | 420,953 | ||||||
| Less accumulated depreciation | 201,331 | 195,667 | ||||||
| Net property, plant, and equipment | 243,385 | 225,286 | ||||||
| OTHER ASSETS: | ||||||||
| Right-of-use assets | 13,162 | 13,449 | ||||||
| Goodwill | 218,899 | 135,409 | ||||||
| Intangible assets, net of accumulated amortization | 239,975 | 150,121 | ||||||
| Deferred compensation plan asset | 13,359 | 11,185 | ||||||
| Other | 3,071 | 3,726 | ||||||
| Total other assets | 488,466 | 313,890 | ||||||
| Total assets | $ | 988,274 | $ | 769,867 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable - trade | $ | 62,792 | $ | 61,195 | ||||
| Accrued payroll and employee benefits | 14,467 | 19,659 | ||||||
| Income tax payable | 6,967 | - | ||||||
| Current portion of long-term debt | 9,812 | 9,913 | ||||||
| Environmental remediation | 7,700 | 7,700 | ||||||
| Other current liabilities | 9,196 | 8,668 | ||||||
| Total current liabilities | 110,934 | 107,135 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Long-term debt, less current portion | 288,281 | 138,906 | ||||||
| Long-term lease liability | 10,572 | 10,920 | ||||||
| Pension withdrawal liability | 3,058 | 3,155 | ||||||
| Deferred income taxes | 22,236 | 22,356 | ||||||
| Deferred compensation liability | 14,293 | 13,132 | ||||||
| Earnout liabilities | 54,021 | 12,604 | ||||||
| Other long-term liabilities | 307 | 1,367 | ||||||
| Total long-term liabilities | 392,768 | 202,440 | ||||||
| Total liabilities | 503,702 | 309,575 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock; authorized: 60,000,000 shares of $0.01 par value; 20,717,850 and 20,684,621 shares issued and outstanding as of June 29, 2025 and March 30, 2025, respectively | 207 | 207 | ||||||
| Additional paid-in capital | 23,277 | 24,094 | ||||||
| Retained earnings | 459,680 | 434,259 | ||||||
| Accumulated other comprehensive income | 1,408 | 1,732 | ||||||
| Total shareholders' equity | 484,572 | 460,292 | ||||||
| Total liabilities and shareholders' equity | $ | 988,274 | $ | 769,867 | ||||
| HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) | ||||||||
| Three Months Ended | ||||||||
| June 29, 2025 | June 30, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 29,175 | $ | 28,879 | ||||
| Reconciliation to cash flows: | ||||||||
| Depreciation and amortization | 12,291 | 9,329 | ||||||
| Change in fair value of earnout liabilities | (1,583 | ) | 342 | |||||
| Operating leases | 923 | 782 | ||||||
| Gain on deferred compensation assets | (942 | ) | (159 | ) | ||||
| Stock compensation expense | 2,212 | 1,467 | ||||||
| Other | (25 | ) | (65 | ) | ||||
| Changes in operating accounts providing (using) cash: | ||||||||
| Trade receivables | (2,651 | ) | (10,576 | ) | ||||
| Inventories | (8,487 | ) | (6,037 | ) | ||||
| Accounts payable | (3,812 | ) | (7,300 | ) | ||||
| Accrued liabilities | (6,735 | ) | (8,949 | ) | ||||
| Lease liabilities | (973 | ) | (834 | ) | ||||
| Income taxes | 9,831 | 9,808 | ||||||
| Other | 2,266 | 899 | ||||||
| Net cash provided by operating activities | 31,490 | 17,586 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant, and equipment | (13,544 | ) | (10,649 | ) | ||||
| Acquisitions | (151,328 | ) | (25,400 | ) | ||||
| Other | 327 | 245 | ||||||
| Net cash used in investing activities | (164,545 | ) | (35,804 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Cash dividends declared and paid | (3,754 | ) | (3,358 | ) | ||||
| Payroll taxes paid in exchange for shares withheld | (3,028 | ) | (2,541 | ) | ||||
| Shares repurchased | - | (9,149 | ) | |||||
| Payments on revolving loan | (10,000 | ) | (10,000 | ) | ||||
| Payments for debt issuance costs | (764 | ) | - | |||||
| Proceeds from revolving loan borrowings | 160,000 | 45,000 | ||||||
| Net cash provided by financing activities | 142,454 | 19,952 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 9,399 | 1,734 | ||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5,103 | 7,153 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 14,502 | $ | 8,887 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | 3,286 | $ | 1,347 | ||||
| Noncash investing activities - capital expenditures in accounts payable | $ | 1,493 | $ | 1,015 | ||||
| HAWKINS, INC. REPORTABLE SEGMENTS (UNAUDITED) (In thousands) | ||||||||||||||||
| Water Treatment | Food & Health Sciences | Industrial Solutions | Total | |||||||||||||
| Three months ended June 29, 2025: | ||||||||||||||||
| Sales | $ | 149,566 | $ | 89,177 | $ | 54,529 | $ | 293,272 | ||||||||
| Cost of sales - materials | 89,159 | 65,814 | 42,848 | 197,821 | ||||||||||||
| Cost of sales - operational overhead | 16,660 | 4,015 | 2,414 | 23,089 | ||||||||||||
| Gross profit | 43,747 | 19,348 | 9,267 | 72,362 | ||||||||||||
| Selling, general, and administrative expenses | 19,085 | 8,381 | 3,563 | 31,029 | ||||||||||||
| Operating income | 24,662 | 10,967 | 5,704 | 41,333 | ||||||||||||
| Three months ended June 30, 2024: | ||||||||||||||||
| Sales | $ | 117,176 | $ | 85,093 | $ | 53,610 | $ | 255,879 | ||||||||
| Cost of sales - materials | 65,997 | 61,547 | 41,941 | 169,485 | ||||||||||||
| Cost of sales - operational overhead | 15,971 | 3,643 | 2,125 | 21,739 | ||||||||||||
| Gross profit | 35,208 | 19,903 | 9,544 | 64,655 | ||||||||||||
| Selling, general, and administrative expenses | 14,079 | 7,365 | 3,420 | 24,864 | ||||||||||||
| Operating income | 21,129 | 12,538 | 6,124 | 39,791 | ||||||||||||
Forward-Looking Statements. Various remarks in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include those relating to consumer demand for products containing our ingredients and the impacts of those demands, expectations for results in our business segments and the timing of our filings with the Securities and Exchange Commission. These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs and assumptions. Forward-looking statements may be identified by terms, including "anticipate," "believe," "can," "could," "expect," "intend," "may," "predict," "should," or "will" or the negative of these terms or other comparable terms. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Actual results may vary materially from those contained in forward looking statements based on a number of factors, including, but not limited to, changes in competition and price pressures, changes in demand and customer requirements or processes for our products, availability of product and disruptions to supplies, interruptions in production resulting from hazards, transportation limitations or other extraordinary events outside our control that may negatively impact our business or the supply chains in which we participate, changes in imported products and tariff levels, the availability of products and the prices at which they are available, the acceptance of new products by our customers and the timing of any such acceptance, and changes in product supplies. Additional information concerning potential factors that could affect future financial results is included in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025, as updated from time to time in amendments and subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on forward-looking statements, which reflect our management's view only as of the date hereof. We do not undertake any obligation to update any forward-looking statements.
| Contacts: | Jeffrey P. Oldenkamp |
| Executive Vice President and Chief Financial Officer | |
| 612/331-6910 | |
| ir@HawkinsInc.com |
