Hawkins (HWKN) came out with quarterly earnings of $1.4 per share, beating the Zacks Consensus Estimate of $1.33 per share. This compares to earnings of $1.38 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +5.26%. A quarter ago, it was expected that this chemical maker would post earnings of $0.74 per share when it actually produced earnings of $0.78, delivering a surprise of +5.41%.Over the last four quarters, the company ha ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 FY2026 financial statements reflect significant growth in assets and liabilities due to acquisitions, with sales up 15% to $293.3 million and net income at $29.2 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$988.3 million** driven by acquisitions, while liabilities rose to **$503.7 million** due to increased long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 29, 2025 | March 30, 2025 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$988,274** | **$769,867** | **+28.4%** | | Goodwill | $218,899 | $135,409 | +61.7% | | Intangible assets, net | $239,975 | $150,121 | +59.9% | | **Total Liabilities** | **$503,702** | **$309,575** | **+62.7%** | | Long-term debt, less current portion | $288,281 | $138,906 | +107.5% | | **Total Shareholders' Equity** | **$484,572** | **$460,292** | **+5.3%** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Sales increased **14.6%** to **$293.3 million**, but operating income growth was limited to **3.9%** due to higher SG&A expenses Quarterly Income Statement Highlights (in thousands, except per-share data) | Metric | Q1 FY2026 (ended June 29, 2025) | Q1 FY2025 (ended June 30, 2024) | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $293,272 | $255,879 | +14.6% | | Gross Profit | $72,362 | $64,655 | +11.9% | | Operating Income | $41,333 | $39,791 | +3.9% | | Net Income | $29,175 | $28,879 | +1.0% | | Diluted EPS | $1.40 | $1.38 | +1.4% | | Cash Dividends per Share | $0.18 | $0.16 | +12.5% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$31.5 million**, while investing activities used **$164.5 million** primarily for acquisitions, funded by **$142.5 million** in financing Quarterly Cash Flow Summary (in thousands) | Activity | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $31,490 | $17,586 | | Net cash used in investing activities | ($164,545) | ($35,804) | | - Acquisitions | ($151,328) | ($25,400) | | Net cash provided by financing activities | $142,454 | $19,952 | | - Proceeds from revolving loan borrowings | $160,000 | $45,000 | | **Net Increase in Cash** | **$9,399** | **$1,734** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment realignment, the **$149.9 million** WaterSurplus acquisition, and the **$400 million** credit facility expansion to fund growth - Effective Q1 FY2026, the company realigned its reporting segments to Water Treatment, Food & Health Sciences, and Industrial Solutions to better reflect its business operations[16](index=16&type=chunk)[53](index=53&type=chunk) - On April 25, 2025, the company acquired WaterSurplus for an initial purchase price of approximately **$149.9 million**, plus a potential earnout of up to **$53.7 million**, adding **$82.7 million** to goodwill and **$94.0 million** to identifiable intangible assets[21](index=21&type=chunk) - To fund the WaterSurplus acquisition, the company amended its credit agreement, increasing the senior secured revolving credit facility to **$400.0 million**, maturing on April 25, 2030[43](index=43&type=chunk)[44](index=44&type=chunk) Goodwill by Segment (in thousands) | Segment | Balance at March 30, 2025 | Addition due to acquisitions | Balance at June 29, 2025 | | :--- | :--- | :--- | :--- | | Water Treatment | $83,968 | $83,490 | $167,458 | | Food & Health Sciences | $46,149 | — | $46,149 | | Industrial Solutions | $5,292 | — | $5,292 | | **Total** | **$135,409** | **$83,490** | **$218,899** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **15%** sales growth driven by acquisitions, limited operating income growth due to higher SG&A, and strong liquidity from an expanded **$400 million** credit facility [Business Acquisitions](index=20&type=section&id=Business%20Acquisitions) The company completed six acquisitions in fiscal 2025 and Q1 FY2026, primarily in Water Treatment, with WaterSurplus being the largest at **~$149.9 million** - Completed six acquisitions in fiscal 2025 and Q1 fiscal 2026, with an aggregate annual revenue of approximately **$102 million**, all within the Water Treatment segment[62](index=62&type=chunk)[63](index=63&type=chunk) - Key acquisitions include WaterSurplus for **~$149.9 million**, Amerochem for **$44.0 million**, and Intercoastal for **$22.0 million**[67](index=67&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Total sales increased **15%** to **$293.3 million**, led by Water Treatment's **28%** growth, while gross margin declined and SG&A expenses rose **24%** Segment Sales Performance (YoY) | Segment | Q1 FY2026 Sales | YoY Change | | :--- | :--- | :--- | | Water Treatment | $149.6M | +28% | | Food & Health Sciences | $89.2M | +5% | | Industrial Solutions | $54.5M | +2% | | **Total** | **$293.3M** | **+15%** | - Gross profit increased by **$7.7 million (12%)**, but gross margin as a percentage of sales slightly declined to **24.7%** from **25.3%** in the prior year[75](index=75&type=chunk) - SG&A expenses rose by **$6.1 million (24%)**, largely due to **$4.9 million** in added costs from acquired businesses, including **$2.0 million** in amortization and **$0.9 million** in acquisition costs[79](index=79&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) Cash increased by **$9.4 million** to **$14.5 million**, with **$31.5 million** from operations and **$150.0 million** net borrowings from the expanded **$400 million** credit facility - Cash provided by operations was **$31.5 million**, a significant increase from **$17.6 million** in the prior-year period[85](index=85&type=chunk) - Net borrowings were **$150.0 million**, primarily to fund the acquisition of WaterSurplus[87](index=87&type=chunk) - The company did not repurchase any common stock during the quarter ended June 29, 2025[87](index=87&type=chunk)[89](index=89&type=chunk) - The revolving credit facility was increased to **$400.0 million** and matures on April 25, 2030, with the company in compliance with all debt covenants as of June 29, 2025[90](index=90&type=chunk)[95](index=95&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces commodity price and interest rate risks, mitigating the latter with a **$60 million** interest rate swap, with minimal foreign currency exposure - The company is subject to risk from commodity chemical price volatility but attempts to pass cost changes to customers[101](index=101&type=chunk) - To manage interest rate risk on its variable-rate debt, the company uses a **$60.0 million** interest rate swap agreement that terminates on May 1, 2027[102](index=102&type=chunk) - A hypothetical **25-basis point** change in interest rates on unhedged variable-rate debt would change annual interest expense by about **$0.1 million**[102](index=102&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 29, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, June 29, 2025[104](index=104&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[105](index=105&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond routine litigation incidental to its business - There are no material pending legal proceedings to which the company is a party[107](index=107&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have been reported from the fiscal 2025 Form 10-K disclosure - No material changes to risk factors from the fiscal 2025 Form 10-K have been reported[108](index=108&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the plan this quarter, with **731,544** shares remaining available for future repurchases - No shares were repurchased under the company's publicly announced plan during the quarter[109](index=109&type=chunk) - A total of **731,544** shares remain available for repurchase under the existing program as of June 29, 2025[109](index=109&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and the amended credit agreement incorporated by reference - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and the iXBRL formatted financial statements (101)[113](index=113&type=chunk) - The Joinder, Consent and Second Amendment to the Credit Agreement dated April 25, 2025, is incorporated by reference[113](index=113&type=chunk)[114](index=114&type=chunk)

Financial Performance - Hawkins' 2025 revenue reached $9744 million[10] - The company's 5-year EPS CAGR is 25%[10] - Net income in fiscal year 2025 was $843 million, with a 24% CAGR[67] - Adjusted EBITDA in fiscal year 2025 was $1675 million, with a 21% CAGR[69] - Diluted EPS in fiscal year 2025 was $403, with a 25% CAGR[74] - Q1 Fiscal Year 2026 revenue reached a record $2933 million, a 15% increase year-over-year[81] - Q1 Fiscal Year 2026 Adjusted EBITDA reached a record $574 million, a 13% increase year-over-year[81] Business Segments - Water Treatment accounted for 46% of revenue, totaling $4465 million[15] - Food & Health Sciences accounted for 33% of revenue, totaling $3225 million[15] - Industrial Solutions accounted for 21% of revenue, totaling $2054 million[15] Capital Allocation - The company has consistently returned capital to shareholders through dividends and share repurchases[32] - Hawkins has a track record of 40 consecutive years of cash dividends[33]

Core Insights - Hawkins, Inc. reported record revenue of $293 million for the first quarter of fiscal 2026, marking a 15% increase year-over-year, with all three reporting segments contributing to this growth [3][6][7] - The Water Treatment segment experienced significant growth, with a 28% increase in sales, driven by both acquired businesses and improved pricing [3][8] - The company successfully completed the acquisition of WaterSurplus, enhancing its capabilities in water treatment and positioning for future growth [3][6][19] Financial Performance - Net income for the first quarter was $29.2 million, or $1.40 per diluted share, compared to $28.9 million, or $1.38 per diluted share in the prior year [5][6] - Adjusted EBITDA increased by 13% to $57.6 million, with trailing twelve-month adjusted EBITDA exceeding $170 million [6][17] - Gross profit rose by 12% to $72.4 million, maintaining a gross margin of 25% [6][11] Segment Performance - Water Treatment segment sales increased by $32.4 million, or 28%, to $149.6 million [8][32] - Food & Health Sciences segment sales grew by $4.1 million, or 5%, to $89.2 million, with agricultural products driving the increase despite competitive pricing pressures [9][32] - Industrial Solutions segment sales saw a modest increase of $0.9 million, or 2%, to $54.5 million, primarily due to higher sales volumes [10][32] Expenses and Balance Sheet - Selling, general and administrative expenses rose by 24% to $31 million, largely due to costs associated with the WaterSurplus acquisition [15][32] - The company's leverage ratio at the end of the first quarter was 1.6x, reflecting a strong balance sheet despite increased debt from the acquisition [3][19] - Working capital increased by $22 million compared to the end of fiscal 2025, driven by higher inventories and receivables [19][27]

Core Insights - New analyst coverage is essential in navigating heightened economic uncertainty, providing updated insights into company fundamentals and risk exposures [2][3] - Recent initiations of coverage on companies like KALA BIO, Graham Corporation, Arq, and Hawkins reflect the growing need for sharper analysis amid inflationary pressures and weakening demand [3][10] Analyst Coverage Importance - Analysts possess specialized knowledge that offers critical insights into a company's financial health, growth potential, and industry trends, which are often difficult for individual investors to acquire independently [4] - New coverage typically indicates a higher investor inclination towards a stock, as it suggests that the company holds potential value [5][7] Value Creation by Analysts - Analysts create value for companies by initiating coverage, acting as intermediaries with extensive access to relevant data, which helps mitigate inefficiencies in the market [6] - Stocks chosen for new coverage usually reflect a positive outlook envisioned by analysts, often leading to more favorable ratings compared to continuously covered stocks [7][8] Market Impact of New Coverage - New analyst coverage can lead to immediate stock price volatility, with positive ratings attracting bullish sentiment and driving share prices higher, while negative ratings may trigger sell-offs [9] - Favorable coverage from multiple analysts can enhance investor confidence, leading to sustained upward momentum in stock valuations [9] Recent Stock Performances - KALA BIO shares increased by 96.1% over the past three months, with a narrowing loss per share estimate for 2025 [10][15] - Graham Corporation shares rose by 75.2% in the same period, with an increasing EPS estimate for fiscal 2026 [10][16] - Arq shares gained 57%, with an unchanged EPS estimate indicating improvement from the previous year's loss [10][17] - Hawkins shares saw a 25.6% increase, despite an unchanged EPS estimate indicating a year-over-year decline [10][18] Screening Criteria for Investment - Stocks with increased analyst coverage and improving average ratings are prioritized, alongside other parameters such as price and average daily volume [12][13]

Core Viewpoint - Element Solutions (ESI) is currently positioned as a more attractive investment option compared to Hawkins (HWKN) based on various valuation metrics and earnings outlook [1][3][7]. Valuation Metrics - ESI has a forward P/E ratio of 16.98, significantly lower than HWKN's forward P/E of 36.02, indicating that ESI may be undervalued [5]. - The PEG ratio for ESI is 1.75, while HWKN's PEG ratio stands at 2.63, suggesting that ESI offers better value relative to its expected earnings growth [5]. - ESI's P/B ratio is 2.32 compared to HWKN's P/B of 7.16, further highlighting ESI's relative undervaluation [6]. Earnings Outlook - ESI is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]. - ESI holds a Zacks Rank of 2 (Buy), while HWKN has a Zacks Rank of 3 (Hold), indicating a stronger earnings improvement for ESI [3]. Value Grades - ESI has a Value grade of B, whereas HWKN has a Value grade of D, reflecting ESI's superior valuation metrics [6].

Company Overview - Hawkins, Inc. is a leading water treatment and specialty ingredients company founded in 1938, headquartered in Roseville, Minnesota [2] - The company operates 64 facilities across 28 states and employs approximately 1,100 people [2] - In fiscal 2025, Hawkins, Inc. generated $974 million in revenue [2] Upcoming Financial Results - Hawkins, Inc. is set to release its financial results for the first quarter of fiscal 2026, which ended on June 29, 2025, after market close on July 30, 2025, at approximately 4:10 p.m. Eastern Time [1]

Company Overview - Hawkins, Inc. is a leading water treatment and specialty ingredients company founded in 1938, headquartered in Roseville, Minnesota [2] - The company operates 64 facilities across 28 states and employs approximately 1,100 people [2] - In fiscal 2025, Hawkins, Inc. generated $974 million in revenue [2] Upcoming Financial Results - Hawkins, Inc. is set to release its financial results for the first quarter of fiscal 2026, which ended on June 29, 2025, after market close on July 30, 2025, at approximately 4:10 p.m. Eastern Time [1]

Core Insights - Hawkins, Inc. has completed the acquisition of PhillTech, LLC, enhancing its water treatment business and market position [1][8] - The company reported a 10% year-over-year revenue increase to $245.3 million in the fiscal fourth quarter of 2024, driven by a 21% growth in the Water Treatment segment [2] - Recent acquisitions, including Industrial Research Corporation and Wofford Water Service, align with Hawkins' growth strategy in key regions, expanding its market presence [3] - The acquisition of Amerochem assets and WaterSurplus further strengthens Hawkins' Water Treatment footprint [4] - Hawkins' shares have increased by 58.9% over the past year, outperforming the industry average of 4.2% [6] Company Strategy - The acquisition of PhillTech is part of Hawkins' strategy to solidify and expand its production capabilities in coagulants and corrosion control products [1][8] - The company emphasizes a judicious pricing strategy to counteract cost inflation, supporting overall performance [4] Market Performance - Hawkins' Water Treatment segment is experiencing strong growth, reflecting the successful integration of recent acquisitions [2] - The company has established a long-standing partnership with PhillTech, which is valued for its strong industry relationships [8]

Company Overview - Hawkins, Inc. is a leading water treatment and specialty ingredients company founded in 1938, headquartered in Roseville, Minnesota [3] - The company operates 64 facilities across 28 states and employs approximately 1,100 people [3] - In fiscal 2025, Hawkins, Inc. generated $974 million in revenue [3] Acquisition Details - Hawkins, Inc. has completed the acquisition of PhillTech, LLC, a manufacturer and distributor of coagulants and corrosion control products located in Alabama [1] - This acquisition is part of Hawkins' strategy to grow its water treatment business and enhance its production capabilities in coagulants and corrosion control products [2] Strategic Importance - The acquisition of PhillTech is expected to solidify and expand Hawkins' market position in the water treatment sector [2] - Hawkins has established a long-term working relationship with PhillTech, having previously collaborated as strategic partners [2]