hwkn-20241229

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 29, 2024


☐			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 Identification No.)


2381 Rosegate, Roseville, Minnesota			55113
(Address of principal executive offices)			(Zip code)


(612) 331-6910
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	HWKN	The Nasdaq Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


CLASS						Shares Outstanding at January 24, 2025
Common Stock, par value $.01 per share						20,929,004

HAWKINS, INC.

INDEX TO FORM 10-Q


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets – Dec ember 29, 2024 and March 31, 2024	1

	Condensed Consolidated Statements of Income – Three and Nine Months Ended Dec ember 29, 2024 and December 3 1, 2023	2

	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended Dec ember 29, 2024 and December 3 1, 2023	3

	Condensed Consolidated Statements of Shareholder’s Equity – Three and Nin e Months Ended Dec ember 29, 2024 and December 3 1, 2023	4

	Condensed Consolidated Statements of Cash Flows – Nine Months Ended Dec ember 29, 2024 and December 3 1, 2023	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17

Item 4.	Controls and Procedures	17

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HAWKINS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)


	December 29, 2024		March 31, 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,305	$	7,153
Trade accounts receivables, net	111,521		114,477
Inventories	81,634		74,600

Prepaid expenses and other current assets	8,895		6,596
Total current assets	210,355		202,826
PROPERTY, PLANT, AND EQUIPMENT:	410,427		386,648
Less accumulated depreciation	189,984		177,774
Net property, plant, and equipment	220,443		208,874
OTHER ASSETS:
Right-of-use assets	13,096		11,713
Goodwill	116,738		103,399
Intangible assets, net of accumulated amortization	130,474		116,626
Deferred compensation plan asset	11,892		9,584
Other	4,242		4,912
Total other assets	276,442		246,234
Total assets	$	707,240	$	657,934
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable — trade	$	39,891	$	56,387
Accrued payroll and employee benefits	18,371		19,532
Income tax payable	—		1,943
Current portion of long-term debt	9,913		9,913

Environmental remediation	7,700		7,700
Other current liabilities	8,379		7,832
Total current liabilities	84,254		103,307
LONG-TERM LIABILITIES:
Long-term debt, less current portion	103,884		88,818
Long-term lease liability	10,613		9,530
Pension withdrawal liability	3,252		3,538
Deferred income taxes	22,120		22,406
Deferred compensation liability	13,413		11,764
Earnout liability	12,262		11,235
Other long-term liabilities	461		1,310
Total long-term liabilities	166,005		148,601
Total liabilities	250,259		251,908
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock; authorized: 60,000,000 shares of $0.01 par value; 20,766,764 and 20,790,261 shares issued and outstanding as of December 29, 2024 and March 31, 2024, respectively	208		208
Additional paid-in capital	32,783		38,154
Retained earnings	421,682		364,549
Accumulated other comprehensive income	2,308		3,115
Total shareholders’ equity	456,981		406,026
Total liabilities and shareholders’ equity	$	707,240	$	657,934

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except share and per-share data)


	Three Months Ended				Nine Months Ended
	December 29, 2024		December 31, 2023		December 29, 2024		December 31, 2023
Sales	$	226,205	$	208,496	$	729,113	$	696,142
Cost of sales	(177,781)		(166,248)		(555,812)		(548,017)

Gross profit	48,424		42,248		173,301		148,125
Selling, general and administrative expenses	(27,361)		(23,774)		(78,702)		(64,173)
Operating income	21,063		18,474		94,599		83,952
Interest expense, net	(1,216)		(1,168)		(3,906)		(3,033)
Other income	436		853		1,268		901
Income before income taxes	20,283		18,159		91,961		81,820
Income tax expense	(5,262)		(3,274)		(23,943)		(20,289)
Net income	$	15,021	$	14,885	$	68,018	$	61,531

Weighted average number of shares outstanding - basic	20,766,764		20,781,632		20,780,213		20,864,349
Weighted average number of shares outstanding - diluted	20,875,387		20,907,321		20,902,456		21,004,077

Basic earnings per share	$	0.72	$	0.72	$	3.27	$	2.95
Diluted earnings per share	$	0.72	$	0.71	$	3.25	$	2.93

Cash dividends declared per common share	$	0.18	$	0.16	$	0.52	$	0.47

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)


	Three Months Ended				Nine Months Ended
	December 29, 2024		December 31, 2023		December 29, 2024		December 31, 2023
Net income	$	15,021	$	14,885	$	68,018	$	61,531
Other comprehensive income, net of tax:

Unrealized gain (loss) on interest rate swap	629		(1,299)		(807)		(244)


Total comprehensive income	$	15,650	$	13,586	$	67,211	$	61,287

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except share data)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount
BALANCE — March 31, 2024	20,790,261	$	208	$	38,154	$	364,549	$	3,115	$	406,026
Cash dividends declared and paid ($0.16 per share)	—	—		—		(3,358)		—		(3,358)
Share-based compensation expense	—	—		1,467		—		—		1,467
Vesting of restricted stock	83,658	1		(1)		—		—		—
Shares surrendered for payroll taxes	(34,047)	(1)		(2,540)		—		—		(2,541)

Shares repurchased	(105,541)	(1)		(9,148)		—		—		(9,149)
Other comprehensive income, net of tax	—	—		—		—		(106)		(106)
Net income	—	—		—		28,879		—		28,879
BALANCE — June 30, 2024	20,734,331	$	207	$	27,932	$	390,070	$	3,009	$	421,218
Cash dividends declared and paid ($0.18 per share)	—	—		—		(3,763)		—		(3,763)
Share-based compensation expense	—	—		1,832		—		—		1,832
Vesting of restricted stock	10,647	—		—		—		—		—

ESPP shares issued	21,786	1		1,296		—		—		1,297

Other comprehensive income, net of tax	—	—		—		—		(1,330)		(1,330)
Net income	—	—		—		24,118		—		24,118
BALANCE — September 29, 2024	20,766,764	$	208	$	31,060	$	410,425	$	1,679	$	443,372
Cash dividends declared and paid ($0.18 per share)	—	—		—		(3,764)		—		(3,764)
Share-based compensation expense	—	—		1,723		—		—		1,723




Other comprehensive loss, net of tax	—	—		—		—		629		629
Net income	—	—		—		15,021		—		15,021
BALANCE — December 29, 2024	20,766,764	$	208	$	32,783	$	421,682	$	2,308	$	456,981


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount
BALANCE — April 2, 2023	20,850,454	$	209	$	44,443	$	302,424	$	2,940	$	350,016
Cash dividends declared and paid ($0.15 per share)	—	—		—		(3,160)		—		(3,160)
Share-based compensation expense	—	—		959		—		—		959
Vesting of restricted stock	105,600	1		(1)		—		—		—
Shares surrendered for payroll taxes	(48,478)	(1)		(2,139)		—		—		(2,140)
ESPP shares issued	35,281	—		1,147		—		—		1,147

Other comprehensive income, net of tax	—	—		—		—		749		749
Net income	—	—		—		23,430		—		23,430
BALANCE — July 2, 2023	20,942,857	$	209	$	44,409	$	322,694	$	3,689	$	371,001
Cash dividends declared and paid ($0.16 per share)	—	—		—		(3,375)		—		(3,375)
Share-based compensation expense	—	—		1,260		—		—		1,260
Vesting of restricted stock	12,565	—		—		—		—		—


Shares repurchased	(167,796)	(1)		(9,751)		—		—		(9,752)
Other comprehensive income, net of tax	—	—		—		—		306		306
Net income	—	—		—		23,216		—		23,216
BALANCE — October 1, 2023	20,787,626	$	208	$	35,918	$	342,535	$	3,995	$	382,656
Cash dividends declared and paid ($0.16 per share)	—	—		—		(3,351)		—		(3,351)
Share-based compensation expense	—	—		1,287		—		—		1,287


ESPP shares issued	26,731	—		1,096		—		—		1,096
Shares repurchased	(24,065)	—		(1,520)		—		—		(1,520)
Other comprehensive income, net of tax	—	—		—		—		(1,299)		(1,299)
Net income	—	—		—		14,885		$	—	14,885
BALANCE — December 31, 2023	20,790,292	$	208	$	36,781	$	354,069	$	2,696	$	393,754

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Nine Months Ended
	December 29, 2024		December 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	68,018	$	61,531
Reconciliation to cash flows:
Depreciation and amortization	29,368		22,849
Change in fair value of earnout liability	1,027		—
Operating leases	2,557		1,884

Gain on deferred compensation assets	(1,268)		(901)

Stock compensation expense	5,022		3,506

Other	(4)		70
Changes in operating accounts providing (using) cash:
Trade receivables	6,157		22,500
Inventories	(5,682)		25,665
Accounts payable	(16,026)		(14,334)
Accrued liabilities	(1,698)		(610)
Lease liabilities	(2,565)		(1,804)
Income taxes	(2,636)		(1,824)
Other	(2,018)		(922)
Net cash provided by operating activities	80,252		117,610
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment	(30,008)		(28,248)


Acquisitions	(43,400)		(78,855)
Other	586		723
Net cash used in investing activities	(72,822)		(106,380)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends declared and paid	(10,885)		(9,886)
New shares issued	1,297		2,243
Payroll taxes paid in exchange for shares withheld	(2,541)		(2,140)


Shares repurchased	(9,149)		(11,272)

Payments on revolving loan	(50,000)		(67,000)

Proceeds from revolving loan borrowings	65,000		75,000
Net cash used in financing activities	(6,278)		(13,055)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1,152		(1,825)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	7,153		7,566
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	8,305	$	5,741

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes	$	26,566	$	22,125
Cash paid for interest	$	4,208	$	3,252
Noncash investing activities - capital expenditures in accounts payable	$	1,152	$	2,887

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. All adjustments made to the interim condensed consolidated financial statements were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the nine months ended December 29, 2024 are not necessarily indicative of the results that may be expected for the full year.

References to fiscal 2024 refer to the fiscal year ended March 31, 2024 and references to fiscal 2025 refer to the fiscal year ending March 30, 2025.

Use of Estimates. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, right-of-use assets, goodwill, intangibles, accrued expenses, short-term and long-term lease liability, income taxes and related accounts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Policies. The accounting policies we follow are set forth in Note 1 – Nature of Business and Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, previously filed with the SEC. There has been no significant change in our accounting policies since the end of fiscal 2024.

Recently Issued Accounting Pronouncements

Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU No.2023-09)

In December 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update No. 2023-09 to enhance the transparency and decision-usefulness of income tax disclosures and to provide information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. We are in the process of evaluating the impact of this standard on the disclosures in our financial statements.

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07)

In November 2023, the FASB issued accounting standards update No. 2023-07 to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The update requires public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and are to be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are in the process of evaluating the impact of this standard on the disclosures in our financial statements.

Note 2 — Acquisitions

Acquisition of Waterguard, Inc.: On October 30, 2024, we acquired substantially all the assets of Waterguard, Inc. ("Water Guard") for $18.0 million under the terms of a purchase agreement with Water Guard and its shareholders. Water Guard distributes water treatment chemicals and equipment to its customers primarily throughout North Carolina. Of the $18.0 million purchase price, $9.3 million was allocated to customer relationships, to be amortized over 15 years, $5.1 million was allocated to goodwill, $1.2 million was allocated to property, plant and equipment, and the remaining amount was allocated to net working capital. The goodwill recognized as a result of this acquisition is primarily attributable to strategic and synergistic benefits, as well as the assembled workforce. Such goodwill is expected to be deductible for tax purposes. The purchase price allocation is not yet complete due to the timing of the acquisition. The results of operations since the acquisition date and the assets are included in our Water Treatment segment. Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of Wofford Water Service, Inc.: On June 28, 2024, we acquired substantially all the assets of Wofford Water Service, Inc. ("Wofford") for $3.4 million under the terms of a purchase agreement with Wofford and its shareholders. Wofford distributed water treatment chemicals and equipment to customers mainly in Mississippi. Of the $3.4 million purchase price, $2.2 million was allocated to customer relationships, to be amortized over 10 years, $1.0 million was allocated to goodwill, and the remaining amount was allocated to net working capital. The goodwill recognized as a result of this acquisition is primarily attributable to strategic and synergistic benefits, as well as the assembled workforce. Such goodwill is expected to be deductible for tax purposes. The results of operations since the acquisition date and the assets are included in our Water Treatment segment. Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of Intercoastal Trading, Inc.: On June 3, 2024, we acquired substantially all the assets of Intercoastal Trading, Inc. and certain related entities ("Intercoastal") for $22.0 million under the terms of a purchase agreement with Intercoastal and its shareholders. Intercoastal distributes water treatment chemicals and equipment to its customers in Maryland, Delaware and Virginia. Of the $22.0 million purchase price, $10.7 million was allocated to customer relationships, to be amortized over 15 years, $0.3 million to trade names, to be amortized over two years, $0.1 million to non-compete agreements, to be amortized over one year, $7.2 million to goodwill, $2.4 million was allocated to property, plant and equipment, and the remaining amount to net working capital. The goodwill recognized as a result of this acquisition is primarily attributable to strategic and synergistic benefits, as well as the assembled workforce. Such goodwill is expected to be deductible for tax purposes. The results of operations since the acquisition date and the assets are included in our Water Treatment segment. Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of Industrial Research Corporation: In the fourth quarter of fiscal 2024, we acquired substantially all the assets of Industrial Research Corporation ("Industrial Research") for $4.6 million under the terms of a purchase agreement with Industrial Research and its shareholders. Industrial Research distributed water treatment chemicals and equipment to customers primarily in central to northern Louisiana, eastern Texas and southern Arkansas. The results of operations since the acquisition date and the assets are included in our Water Treatment segment. Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of The Miami Products & Chemical Company: In the third quarter of fiscal 2024, we acquired substantially all the assets of The Miami Products & Chemical Company ("Miami Products") for $15.5 million under the terms of a purchase agreement with Miami Products and its shareholders. Miami Products is a bleach manufacturer and distributor serving customers primarily throughout Ohio and the surrounding region. The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

Acquisition of Water Solutions Unlimited, Inc.: In the third quarter of fiscal 2024, we acquired substantially all the assets of Water Solutions Unlimited, Inc. ("Water Solutions") under the terms of a purchase agreement with Water Solutions and its shareholders. We paid $60 million at closing and may be obligated to pay an additional amount based on achieving a certain earnings target three years after the acquisition. Water Solutions is a manufacturer and distributor of water treatment chemicals serving customers primarily throughout Indiana, Illinois and Michigan. The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

Acquisition of EcoTech Enterprises, Inc.: In the second quarter of fiscal 2024, we acquired substantially all the assets of EcoTech Enterprises, Inc. ("EcoTech") for $3.4 million, under the terms of a purchase agreement with EcoTech and its shareholders. EcoTech was a water treatment chemical distribution company operating primarily in Arkansas. The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

Note 3 - Revenue

Our revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. We disaggregate revenues from contracts with customers by operating segments as well as types of products sold. Reporting by operating segment is pertinent to understanding our revenues, as it aligns to how we review the financial performance of our operations. Types of products sold within each operating segment help us to further evaluate the financial performance of our segments. The following tables disaggregate external customer net sales by major revenue stream for the three and nine months ended December 29, 2024 and December 31, 2023:


	Three months ended December 29, 2024
(In thousands)	Water Treatment		Industrial		Health and Nutrition		Total
Manufactured, blended or repackaged products (1)	$	89,367	$	76,306	$	9,240	$	174,913
Distributed specialty products (2)	—		—		25,018		25,018
Bulk products (3)	9,136		14,075		—

SEC Form 10-Q filed by Hawkins Inc.