Hawkins, Inc. Reports First Quarter Fiscal 2026 Results

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 30,2024Net 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 30,2024Sales $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 30,2025ASSETS 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 30,2024CASH 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) WaterTreatment Food & Health Sciences Industrial Solutions TotalThree 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

Hawkins, Inc. Reports First Quarter Fiscal 2026 Results

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