ROSEVILLE, Minn, June 03, 2024 (GLOBE NEWSWIRE) -- Hawkins, Inc. (Nasdaq: HWKN), a leading specialty chemical and ingredients company, has completed the acquisition of the assets of Intercoastal Trading, Inc. and its affiliated companies. Intercoastal Trading distributes water treatment chemicals and equipment for its customers in Maryland, Delaware, and Virginia. "As we continue to grow our water treatment business, Intercoastal Trading will accelerate our expansion in the heavily populated East Coast with ...

Segment Highlights Industrial segment sales fell 18% year over year to $97.1 million in the reported quarter. Sales in the segment were affected by the divestment of the company's consumer bleach packaging business, decreased volumes and lower selling prices on certain products due to reduced raw material costs and competitive pricing pressures. Sales from the Water Treatment segment climbed 21% year over year to $86.7 million. Sales were driven by added sales from acquired businesses. Hawkins, Inc. (HWKN) ...

Financial Performance - Sales for fiscal 2024 were $919.2 million, a decrease of $15.9 million, or 2%, from $935.1 million in fiscal 2023[112] - Gross profit increased by $28.5 million, or 17%, to $193.6 million, representing 21% of sales for fiscal 2024, compared to 18% of sales in fiscal 2023[116] - Diluted earnings per share (EPS) rose to $3.59, an increase of $0.73, or 26%, from $2.86 in fiscal 2023[104] - Operating income rose by $15.8 million, or 18%, to $104.0 million, or 11% of sales, for fiscal 2024, compared to 9% of sales in fiscal 2023[121] Segment Performance - The Water Treatment segment saw sales increase by $58.4 million, or 19%, to $363.3 million for fiscal 2024, driven by increased selling prices and sales volumes[114] - The Industrial segment experienced a sales decline of $61.3 million, or 13%, to $409.5 million for fiscal 2024, impacted by lower volumes and the sale of the consumer bleach packaging business[113] Expenses and Costs - SG&A expenses increased by $12.6 million, or 16%, to $89.6 million, or 10% of sales, for fiscal 2024, influenced by costs from acquired businesses[120] Cash Flow and Investments - Cash provided by operating activities increased by $82.1 million to $159.5 million in fiscal 2024, primarily due to favorable changes in trade receivables and inventory[125] - Cash used in investing activities increased to $122.5 million in fiscal 2024 from $41.2 million in fiscal 2023, primarily due to an acquisition spending of $83.5 million[126] - Capital expenditures for property, plant, and equipment decreased to $40.2 million in fiscal 2024 from $48.3 million in fiscal 2023, driven by reduced facility improvements and expansions[126] - Cash used in financing activities rose to $37.4 million in fiscal 2024 compared to $32.1 million in fiscal 2023, including cash dividends of $13.2 million and share repurchases of $11.3 million[127] Tax and Compliance - The effective tax rate decreased to approximately 26% for fiscal 2024, down from 27% in fiscal 2023, due to favorable tax provision adjustments[122] - The company is in compliance with all covenants of the Credit Agreement as of March 31, 2024, and expects to remain compliant for the next 12 months[133] Debt and Interest Rates - The company has a Revolving Loan Facility totaling $250.0 million, with a five-year maturity date, maturing on April 30, 2027[129] - The effective interest rate on borrowings under the Revolving Loan Facility was 4.3% as of March 31, 2024[130] - A 25-basis point change in interest rates on the variable-rate portion of debt not covered by the interest rate swap could potentially affect annual interest expense by approximately $0.1 million[142] Future Plans - The company acquired four businesses in fiscal 2024, contributing approximately $70 million in annual revenue[108] - The company anticipates total capital expenditures in the range of $40 to $45 million for fiscal 2025[138] - The company plans to pursue acquisitions or strategic relationships to complement or expand its existing businesses[136]

ROSEVILLE, Minn., May 13, 2024 (GLOBE NEWSWIRE) -- Hawkins, Inc. (NASDAQ:HWKN), a leading specialty chemical company, today announced that it will participate in the Wells Fargo Industrials Conference on June 11, 2024. The conference will be held at the Loews Chicago. The conference will consist of fireside chats and one-on-one meetings. Hawkins management will participate on June 11th. For more information about the conference or to schedule a meeting with Hawkins management, please contact the event coord ...

ROSEVILLE, Minn., May 01, 2024 (GLOBE NEWSWIRE) -- Hawkins, Inc. (NASDAQ:HWKN) announced today that it expects to release its financial results for its fourth quarter and fiscal year ended March 31, 2024 after the market closes on May 15, 2024 at approximately 4:10 p.m. Eastern Time.  About Hawkins, Inc. Hawkins, Inc. was founded in 1938 and is a leading specialty chemical and ingredients company that formulates, distributes, blends, and manufactures products for its Industrial, Water Treatment, and Health ...

ROSEVILLE, Minn., May 01, 2024 (GLOBE NEWSWIRE) -- Hawkins, Inc. (Nasdaq: HWKN) announced today that it expects to release its financial results for its fourth quarter and fiscal year ended March 31, 2024 after the market closes on May 15, 2024 at approximately 4:10 p.m. Eastern Time.  About Hawkins, Inc. Hawkins, Inc. was founded in 1938 and is a leading specialty chemical and ingredients company that formulates, distributes, blends, and manufactures products for its Industrial, Water Treatment, and Health ...

Hawkins, Inc’s (HWKN) shares touched a new 52-week high of $79.12 on Apr 5 before closing at $78.16.In the past year, the stock has surged 79.8% compared with the industry’s 24.6% growth.Image Source: Zacks Investment ResearchWhat’s Driving Hawkins?In the third quarter of fiscal 2024, Hawkins experienced a significant upswing in its Water Treatment division, recording a remarkable 20% year-over-year increase in sales and totaling $82 million. The upside was propelled by heightened volumes and increased sell ...

HAWKINS, INC. INDEX TO FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-7647 HAWKINS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0771293 (State or other jurisdiction of incorporation o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-7647 HAWKINS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-0771293 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Id ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's discussion and analysis for the recent fiscal quarter [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income statements, shareholders' equity statements, and cash flow statements, along with detailed notes explaining significant accounting policies, revenue disaggregation, fair value measurements, inventory, debt, and segment information for the three months ended July 2, 2023, and comparable periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | July 2, 2023 | April 2, 2023 | | :-------------------- | :----------- | :------------ | | Total assets | $591,963 | $590,535 | | Total liabilities | $220,962 | $240,519 | | Total shareholders' equity | $371,001 | $350,016 | - Total assets increased slightly by **$1,428 thousand** (0.24%) from April 2, 2023, to July 2, 2023[6](index=6&type=chunk) - Total liabilities decreased by **$19,557 thousand** (8.13%) from April 2, 2023, to July 2, 2023[6](index=6&type=chunk) - Total shareholders' equity increased by **$20,985 thousand** (5.99%) from April 2, 2023, to July 2, 2023[6](index=6&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Statements%20of%20Income) Details the company's revenues, expenses, and net income over a specific period Condensed Consolidated Statements of Income (in thousands, except per-share) | Metric (in thousands, except per-share) | Three Months Ended July 2, 2023 | Three Months Ended July 3, 2022 | Change ($) | Change (%) | | :-------------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Sales | $251,120 | $246,543 | $4,577 | 1.86% | | Gross profit | $51,991 | $46,749 | $5,242 | 11.21% | | Operating income | $32,487 | $27,864 | $4,623 | 16.59% | | Net income | $23,430 | $19,695 | $3,735 | 18.96% | | Basic earnings per share | $1.12 | $0.94 | $0.18 | 19.15% | | Diluted earnings per share | $1.12 | $0.94 | $0.18 | 19.15% | | Cash dividends declared per common share | $0.15 | $0.14 | $0.01 | 7.14% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Reports net income and other comprehensive income items, such as unrealized gains or losses Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three Months Ended July 2, 2023 | Three Months Ended July 3, 2022 | Change ($) | Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Net income | $23,430 | $19,695 | $3,735 | 18.96% | | Unrealized gain on interest rate swap | $749 | $465 | $284 | 61.08% | | Total comprehensive income | $24,179 | $20,160 | $4,019 | 19.94% | [Condensed Consolidated Statements of Shareholder's Equity](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Statements%20of%20Shareholder's%20Equity) Outlines changes in shareholders' equity, including net income, dividends, and share repurchases - Shareholders' equity increased from **$350,016 thousand** at April 2, 2023, to **$371,001 thousand** at July 2, 2023, primarily driven by net income of **$23,430 thousand** and other comprehensive income of **$749 thousand**[11](index=11&type=chunk) - Cash dividends declared and paid were **$3,160 thousand** (**$0.15 per share**) for the three months ended July 2, 2023, compared to **$2,958 thousand** (**$0.14 per share**) for the same period in 2022[11](index=11&type=chunk) - No shares were repurchased during the three months ended July 2, 2023, while **181,657 shares** were repurchased for **$6,557 thousand** during the three months ended July 3, 2022[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Item%201.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Three Months Ended July 2, 2023 | Three Months Ended July 3, 2022 | Change ($) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | | Net cash provided by (used in) operating activities | $34,866 | $(9,395) | $44,261 | | Net cash used in investing activities | $(7,829) | $(11,527) | $3,698 | | Net cash (used in) provided by financing activities | $(27,553) | $23,421 | $(50,974) | | Net (decrease) increase in cash and cash equivalents | $(516) | $2,499 | $(3,015) | | Cash and cash equivalents, end of period | $7,050 | $5,995 | $1,055 | - The significant increase in cash provided by operating activities was primarily driven by decreased cash expended for inventory purchases and increased net income[13](index=13&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Item%201.%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1 – Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) Describes the key accounting principles and methods used in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with Form 10-Q instructions and generally accepted accounting principles[14](index=14&type=chunk) - Management's opinion is that the financial statements contain all necessary adjustments for fair presentation, with all adjustments being of a normal recurring nature[14](index=14&type=chunk) - There has been no significant change in accounting policies since the end of fiscal 2023 (April 2, 2023)[17](index=17&type=chunk) [Note 2 – Asset Sales](index=9&type=section&id=Note%202%20%E2%80%93%20Asset%20Sales) Details the sale of certain assets and the resulting gain recognized by the company - In the fourth quarter of fiscal 2023, the company sold certain assets related to its consumer bleach packaging business in the Industrial segment for **$7 million**[18](index=18&type=chunk) - A gain of **$3 million** was realized on this sale, recorded within selling, general and administrative expenses[18](index=18&type=chunk) [Note 3 – Revenue](index=10&type=section&id=Note%203%20%E2%80%93%20Revenue) Disaggregates revenue by product type and segment, highlighting year-over-year changes Revenue by Product Type and Segment (in thousands) | (In thousands) | Industrial (2023) | Water Treatment (2023) | Health and Nutrition (2023) | Total (2023) | Industrial (2022) | Water Treatment (2022) | Health and Nutrition (2022) | Total (2022) | | :------------- | :---------------- | :--------------------- | :-------------------------- | :----------- | :---------------- | :--------------------- | :-------------------------- | :----------- | | Manufactured, blended or repackaged products | $102,675 | $84,785 | $10,241 | $197,701 | $101,612 | $70,357 | $11,961 | $183,930 | | Distributed specialty products | — | — | $26,154 | $26,154 | — | — | $31,089 | $31,089 | | Bulk products | $15,210 | $7,521 | — | $22,731 | $20,455 | $6,790 | — | $27,245 | | Other | $2,988 | $1,345 | $201 | $4,534 | $2,643 | $1,343 | $293 | $4,279 | | **Total external customer sales** | **$120,873** | **$93,651** | **$36,596** | **$251,120** | **$124,710** | **$78,490** | **$43,343** | **$246,543** | - Total external customer sales increased by **$4,577 thousand** (1.86%) year-over-year[20](index=20&type=chunk) - Water Treatment segment sales increased by **$15,161 thousand** (19.32%), while Industrial segment sales decreased by **$3,837 thousand** (3.08%) and Health and Nutrition segment sales decreased by **$6,747 thousand** (15.57%)[20](index=20&type=chunk) [Note 4 – Earnings per Share](index=10&type=section&id=Note%204%20%E2%80%93%20Earnings%20per%20Share) Presents basic and diluted earnings per share for the reporting periods Earnings per Share | Metric | Three Months Ended July 2, 2023 | Three Months Ended July 3, 2022 | | :----- | :------------------------------ | :------------------------------ | | Basic EPS | $1.12 | $0.94 | | Diluted EPS | $1.12 | $0.94 | - Basic and diluted EPS increased by **$0.18** (19.15%) year-over-year[7](index=7&type=chunk) [Note 5 – Fair Value Measurements](index=11&type=section&id=Note%205%20%E2%80%93%20Fair%20Value%20Measurements) Details the fair value of financial instruments, including deferred compensation assets and interest rate swaps Fair Value Measurements (in thousands) | (In thousands) | July 2, 2023 | April 2, 2023 | | :------------- | :----------- | :------------ | | Deferred compensation plan assets | $9,454 | $7,659 | | Interest rate swap | $5,053 | $4,028 | - Deferred compensation plan assets increased by **$1,795 thousand** (23.44%) from April 2, 2023, to July 2, 2023[26](index=26&type=chunk) - Interest rate swap fair value increased by **$1,025 thousand** (25.45%) from April 2, 2023, to July 2, 2023[26](index=26&type=chunk) [Note 6 – Inventories](index=11&type=section&id=Note%206%20%E2%80%93%20Inventories) Provides a breakdown of inventory valuation methods and changes in net inventory Inventories (in thousands) | (In thousands) | July 2, 2023 | April 2, 2023 | | :------------- | :----------- | :------------ | | Inventory (FIFO basis) | $116,501 | $128,589 | | LIFO reserve | $(39,563) | $(39,812) |\n| Net inventory | $76,938 | $88,777 | - Net inventory decreased by **$11,839 thousand** (13.34%) from April 2, 2023, to July 2, 2023[27](index=27&type=chunk) - The LIFO reserve decreased by **$249 thousand**, indicating a favorable impact on gross profit in the current quarter[27](index=27&type=chunk)[53](index=53&type=chunk) [Note 7 – Goodwill and Intangible Assets](index=11&type=section&id=Note%207%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) Reports the carrying amounts of goodwill and intangible assets by segment - Goodwill remained constant at **$77.4 million** as of July 2, 2023, and April 2, 2023, with **$44.9 million** related to Health and Nutrition, **$26.0 million** to Water Treatment, and **$6.5 million** to Industrial segments[28](index=28&type=chunk) Intangible Assets (in thousands) | (In thousands) | July 2, 2023 Net | April 2, 2023 Net | | :------------- | :--------------- | :---------------- | | Total finite-life intangible assets | $70,164 | $71,833 | | Indefinite-life intangible assets | $1,227 | $1,227 | | Total intangible assets | $71,391 | $73,060 | - Net intangible assets decreased by **$1,669 thousand** (2.28%) from April 2, 2023, to July 2, 2023[28](index=28&type=chunk) [Note 8 – Debt](index=12&type=section&id=Note%208%20%E2%80%93%20Debt) Details the company's debt obligations, including revolving loans and compliance with covenants Debt (in thousands) | (In thousands) | July 2, 2023 | April 2, 2023 | | :------------- | :----------- | :------------ | | Senior secured revolving loan | $88,600 | $112,000 | | Total long-term debt | $78,353 | $101,731 | - The senior secured revolving loan balance decreased by **$23,400 thousand** (20.89%) from April 2, 2023, to July 2, 2023[29](index=29&type=chunk) - The company was in compliance with all covenants of its credit agreement as of July 2, 2023[29](index=29&type=chunk) [Note 9 – Income Taxes](index=12&type=section&id=Note%209%20%E2%80%93%20Income%20Taxes) Explains the effective income tax rate and factors influencing it - The effective income tax rate was **26%** for the three months ended July 2, 2023, an increase from **25%** for the three months ended July 3, 2022[30](index=30&type=chunk) - The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes[30](index=30&type=chunk) [Note 10 – Share-Based Compensation](index=12&type=section&id=Note%2010%20%E2%80%93%20Share-Based%20Compensation) Reports compensation expense related to share-based awards and restricted stock activity - Compensation expense related to performance share units and restricted stock increased to **$0.7 million** for the three months ended July 2, 2023, from **$0.4 million** in the prior year period[32](index=32&type=chunk) Restricted Stock Activity | Restricted Stock Activity | Shares (July 2, 2023) | | :------------------------ | :-------------------- | | Unvested at beginning of period | 189,258 | | Granted | 61,819 | | Vested | (105,600) | | Unvested at end of period | 145,477 | [Note 11 – Share Repurchase Program](index=12&type=section&id=Note%2011%20%E2%80%93%20Share%20Repurchase%20Program) Provides details on share repurchases and the remaining authorization under the program - No shares were repurchased during the three months ended July 2, 2023[34](index=34&type=chunk) - During the three months ended July 3, 2022, **181,657 shares** were repurchased for an aggregate purchase price of **$6.6 million**[34](index=34&type=chunk) - As of July 2, 2023, **1,129,348 shares** remained available for repurchase under the program[34](index=34&type=chunk) [Note 12 – Segment Information](index=13&type=section&id=Note%2012%20%E2%80%93%20Segment%20Information) Presents financial performance data, including sales, gross profit, and operating income, by business segment Segment Information (in thousands) | (In thousands) | Industrial (2023) | Water Treatment (2023) | Health and Nutrition (2023) | Total (2023) | Industrial (2022) | Water Treatment (2022) | Health and Nutrition (2022) | Total (2022) | | :------------- | :---------------- | :--------------------- | :-------------------------- | :----------- | :---------------- | :--------------------- | :-------------------------- | :----------- | | Sales | $120,873 | $93,651 | $36,596 | $251,120 | $124,710 | $78,490 | $43,343 | $246,543 | | Gross profit | $19,306 | $26,408 | $6,277 | $51,991 | $20,009 | $18,953 | $7,787 | $46,749 | | Operating income | $12,731 | $17,282 | $2,474 | $32,487 | $13,624 | $10,252 | $3,988 | $27,864 | - Water Treatment segment sales increased by **19%** and operating income increased by **68.57%** year-over-year[37](index=37&type=chunk) - Health and Nutrition segment sales decreased by **15.57%** and operating income decreased by **37.96%** year-over-year[37](index=37&type=chunk) [Note 13 – Subsequent Events](index=13&type=section&id=Note%2013%20%E2%80%93%20Subsequent%20Events) Discloses significant events occurring after the balance sheet date, such as acquisitions - In July 2023, the company acquired substantially all the assets of EcoTech Enterprises, Inc. for **$3.4 million**[38](index=38&type=chunk) - EcoTech is a manufacturer and distributor of water treatment chemicals, and its operations will be included in the Water Treatment segment[38](index=38&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three months ended July 2, 2023, compared to the prior year. It covers an overview of the business, recent asset sales and acquisitions, the share repurchase program, detailed results of operations by segment, liquidity and capital resources, critical accounting estimates, and forward-looking statements [Overview](index=14&type=section&id=Item%202.%20Overview) Provides a general description of the company's business and revenue streams - The company derives substantially all revenues from the sale of chemicals and specialty ingredients[40](index=40&type=chunk) - Business has expanded from bulk chemical distribution to include value-added chemicals and specialty ingredients, including manufacturing, blending, and repackaging[40](index=40&type=chunk) [Asset Sales and Business Acquisitions](index=14&type=section&id=Item%202.%20Asset%20Sales%20and%20Business%20Acquisitions) Summarizes recent divestitures and acquisitions, including their financial impact - Acquired EcoTech Enterprises, Inc. for **$3.4 million** in July 2023, expanding the Water Treatment segment[41](index=41&type=chunk) - Sold consumer bleach packaging business assets in the Industrial segment for **$7 million** in Q4 fiscal 2023, realizing a **$3 million** gain[42](index=42&type=chunk) [Share Repurchase Program](index=14&type=section&id=Item%202.%20Share%20Repurchase%20Program) Details the company's share repurchase authorization and remaining capacity - A share repurchase program for up to **2.6 million** common shares is in place[43](index=43&type=chunk) - As of July 2, 2023, **1,129,348 shares** remain available for repurchase[43](index=43&type=chunk) [Financial Results](index=14&type=section&id=Item%202.%20Financial%20Results) Discusses the company's approach to profitability measurement and inventory valuation methods - The company focuses on total profitability dollars rather than profitability as a percentage of sales due to raw material price fluctuations[44](index=44&type=chunk) - LIFO method is used for valuing the majority of inventory in Industrial and Water Treatment segments, while FIFO is used for Health and Nutrition[45](index=45&type=chunk) - Bulk commodity products, which are generally distributed without significant value-add, typically have the lowest margins and are price sensitive[46](index=46&type=chunk) [Results of Operations](index=14&type=section&id=Item%202.%20Results%20of%20Operations) Analyzes the company's financial performance, including sales, gross profit, and operating income Financial Performance as Percentage of Sales | Metric | Three Months Ended July 2, 2023 | Three Months Ended July 3, 2022 | | :----- | :------------------------------ | :------------------------------ | | Sales | 100.0 % | 100.0 % | | Gross profit | 20.7 % | 19.0 % | | Operating income | 12.9 % | 11.3 % | | Net income | 9.2 % | 8.0 % | [Three Months Ended July 2, 2023 Compared to Three Months Ended July 3, 2022](index=15&type=section&id=Item%202.%20Three%20Months%20Ended%20July%202%2C%202023%20Compared%20to%20Three%20Months%20Ended%20July%203%2C%202022) Compares the company's financial performance for the current quarter against the prior year period [Sales](index=15&type=section&id=Item%202.%20Sales) Analyzes sales performance across segments, highlighting drivers of change - Total sales increased by **$4.6 million** (2%) to **$251.1 million**, driven by increased selling prices[49](index=49&type=chunk) - Industrial segment sales decreased by **$3.8 million** (3%) due to the divestiture of the consumer bleach packaging business (**$4.7 million** lower sales) and overall lower volumes, partially offset by increased selling prices[50](index=50&type=chunk) - Water Treatment segment sales increased by **$15.2 million** (19%) to **$93.7 million**, primarily due to increased selling prices driven by higher raw material costs[51](index=51&type=chunk) - Health and Nutrition segment sales decreased by **$6.7 million** (15%) to **$36.6 million**, attributed to decreased sales volumes from softened customer demand and excess inventory[52](index=52&type=chunk) [Gross Profit](index=15&type=section&id=Item%202.%20Gross%20Profit) Examines changes in gross profit and margin, including the impact of LIFO adjustments - Gross profit increased by **$5.3 million** (11%) to **$52.0 million**, with gross margin improving from **19%** to **21%** of sales[53](index=53&type=chunk) - The LIFO reserve decreased by **$0.2 million** in the current quarter, increasing gross profit, compared to a **$3.8 million** increase in the prior year that decreased gross profit due to rising raw material prices[53](index=53&type=chunk) - Water Treatment segment gross profit increased by **$7.4 million** (39%) to **$26.4 million**, driven by improved per-unit margins[55](index=55&type=chunk) - Health and Nutrition segment gross profit decreased by **$1.5 million** (19%) to **$6.3 million** due to lower sales volumes and per-unit margins[56](index=56&type=chunk) [Selling, General and Administrative Expenses](index=16&type=section&id=Item%202.%20Selling%2C%20General%20and%20Administrative%20Expenses) Discusses changes in SG&A expenses and factors contributing to these changes - SG&A expenses increased by **$0.6 million** (3%) to **$19.5 million**[57](index=57&type=chunk) - A **$1.1 million** unfavorable year-over-year impact resulted from compensation expense related to gains on deferred compensation plan investments in the current quarter versus losses in the prior year, partially offset by expense control measures[57](index=57&type=chunk) [Operating Income](index=16&type=section&id=Item%202.%20Operating%20Income) Reviews the increase in operating income and improvement in operating margin - Operating income increased by **$4.6 million** (16%) to **$32.5 million**, with operating margin improving from **11%** to **13%** of sales[58](index=58&type=chunk) [Interest Expense, Net](index=16&type=section&id=Item%202.%20Interest%20Expense%2C%20Net) Analyzes changes in net interest expense due to borrowing rates and debt levels - Interest expense increased from **$0.9 million** to **$1.1 million**, primarily due to higher borrowing interest rates, largely offset by decreased outstanding borrowings[59](index=59&type=chunk) [Other Income (Expense)](index=16&type=section&id=Item%202.%20Other%20Income%20(Expense)) Explains the shift in other income/expense, primarily from deferred compensation investments - Other income was **$0.3 million**, a shift from other expense of **$0.8 million** in the prior year, due to gains on deferred compensation plan investments versus losses in the prior period[60](index=60&type=chunk) [Income Tax Provision](index=16&type=section&id=Item%202.%20Income%20Tax%20Provision) Discusses the effective income tax rate and its expected full-year range - The effective income tax rate increased to **26%** for the current quarter from **25%** in the prior year[61](index=61&type=chunk) - The effective tax rate for the full year is expected to be approximately **26% to 27%**[61](index=61&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Item%202.%20Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, operating cash flow, debt, and compliance with credit covenants - Cash and cash equivalents decreased by **$0.5 million** to **$7.0 million** at July 2, 2023[62](index=62&type=chunk) - Cash provided by operating activities significantly increased to **$34.9 million**, compared to **$9.4 million** used in the prior year, driven by decreased inventory purchases and increased net income[63](index=63&type=chunk) - Net debt repayments of **$23.4 million** occurred in the current quarter, contrasting with net debt proceeds of **$33.5 million** in the prior year[65](index=65&type=chunk) - The company has a **$250 million** senior secured Revolving Loan Facility maturing on April 30, 2027, and was in compliance with all covenants as of July 2, 2023[68](index=68&type=chunk)[72](index=72&type=chunk) - An interest rate swap agreement with a notional amount of **$60 million** is in place to manage variable-rate long-term debt risk[74](index=74&type=chunk) [Critical Accounting Estimates](index=17&type=section&id=Item%202.%20Critical%20Accounting%20Estimates) Confirms no material changes to critical accounting estimates since the last annual report - There were no material changes in critical accounting estimates since the filing of the Annual Report on Form 10-K for the fiscal year ended April 2, 2023[76](index=76&type=chunk) [Forward-Looking Statements](index=19&type=section&id=Item%202.%20Forward-Looking%20Statements) Highlights the nature of forward-looking statements and associated risks and uncertainties - The report contains forward-looking statements based on current expectations, estimates, and projections, subject to risks and uncertainties[77](index=77&type=chunk) - The company cautions against undue reliance on these statements and is not obligated to update them[77](index=77&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to market risks, primarily related to the cyclical nature of commodity chemical prices and interest rate fluctuations on its variable-rate debt. The company uses an interest rate swap to mitigate interest rate risk and aims to pass on material cost changes to customers - The company is subject to risks from the cyclical nature of commodity chemical prices and attempts to pass cost changes to customers[79](index=79&type=chunk) - An interest rate swap agreement with a notional amount of **$60 million**, terminating on May 1, 2027, is in place to manage variable-rate long-term debt risk[80](index=80&type=chunk) - A **25-basis point** change in interest rates on unhedged variable-rate debt would impact annual interest expense by approximately **$0.1 million**[80](index=80&type=chunk) [Item 4. Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, confirming their effectiveness, and reports no material changes in internal control over financial reporting during the first quarter of fiscal 2024 [Evaluation of Disclosure Controls and Procedures](index=20&type=section&id=Item%204.%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of July 2, 2023[82](index=82&type=chunk) [Changes in Internal Control](index=20&type=section&id=Item%204.%20Changes%20in%20Internal%20Control) Reports no material changes in internal control over financial reporting during the quarter - There was no material change in internal control over financial reporting during the first quarter of fiscal 2024[83](index=83&type=chunk) PART II. OTHER INFORMATION This section provides additional non-financial information, including legal matters, risk factors, and exhibits [Item 1. Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no material pending legal proceedings against the company, beyond routine litigation incidental to its business - There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business[85](index=85&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes to the company's risk factors since the last Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those disclosed in the Annual Report on Form 10-K for the fiscal year ended April 2, 2023[86](index=86&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the company's share repurchase program, indicating no shares were repurchased during the three months ended July 2, 2023, and details the remaining shares available under the program - No shares were repurchased under the program during the three months ended July 2, 2023[87](index=87&type=chunk) - As of July 2, 2023, **1,129,348 shares** remained available to be repurchased under the Board-authorized program[87](index=87&type=chunk) [Item 3. Defaults Upon Senior Securities](index=21&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - None[88](index=88&type=chunk) [Item 4. Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company's operations - Not Applicable[89](index=89&type=chunk) [Item 5. Other Information](index=21&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - None[90](index=90&type=chunk) [Item 6. Exhibits](index=22&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including certifications by the CEO and CFO, and the financial statements formatted in Inline Extensible Business Reporting Language (iXBRL) - Includes Certifications by Chief Executive Officer (31.1, 32.1) and Chief Financial Officer (31.2, 32.2) pursuant to the Exchange Act[92](index=92&type=chunk) - Financial statements from the Quarterly Report on Form 10-Q are filed in Inline Extensible Business Reporting Language (iXBRL) format (Exhibit 101)[92](index=92&type=chunk) SIGNATURES Confirms the official submission of the report by authorized company officers