What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-04 compared with 2022-02-02 · 89 added, 184 removed, 285 unchanged (49% of the section changed)

3 unchanged sentences

(In thousands, except share data)

2021 March 28,

2022 April 3,

CURRENT ASSETS:

2 unchanged sentences

Inventories 104,988 94,985

Income taxes receivable 811 175

Prepaid expenses and other current assets 3,864 6,431

8 unchanged sentences

Intangible assets, net of accumulated amortization 78,435 80,193

Deferred compensation plan asset 7,285 6,783

Other 3,238 2,761

5 unchanged sentences

Accrued payroll and employee benefits 9,658 19,034

Income tax payable 6,684 39

Current portion of long-term debt 9,913 9,913

14 unchanged sentences

60,000,000 shares of $ 0.01 par value;

20,858,385 and 20,969,746 shares issued and outstanding as of December 26, 2021 and March 28, 2021, respectively

20,807,338 and 20,889,777 shares issued and outstanding as of July 3, 2022 and April 3, 2022, respectively

Additional paid-in capital 40,192 46,717

Retained earnings 271,121 254,384

Accumulated other comprehensive income 1,756 1,291

Total shareholders’ equity 313,277 302,601

4 unchanged sentences

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

Three Months Ended Nine Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Three Months Ended

2022 June 27,

Sales $ 246,543 $ 181,241

4 unchanged sentences

Interest expense, net ( 929 ) ( 349 )

Other income 132 478 548 1,282

Other (expense) income ( 763 ) 232

Income before income taxes 26,172 22,001

10 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Three Months Ended

2022 June 27,

Net income $ 19,695 $ 16,628

Other comprehensive loss, net of tax:

Other comprehensive income, net of tax:

Unrealized gain on interest rate swap 465 —

9 unchanged sentences

Shares Amount

BALANCE — March 28, 2021 20,969,746 $ 210 $ 51,138 $ 213,898 $ — $ 265,246

Cash dividends declared and paid — — — ( 2,600 ) — ( 2,600 )

BALANCE — April 3, 2022 20,889,777 $ 209 $ 46,717 $ 254,384 $ 1,291 $ 302,601

Cash dividends declared and paid ($ 0.14 per share)

— — — ( 2,958 ) — ( 2,958 )

Share-based compensation expense — — 595 — — 595

1 unchanged sentence

Shares surrendered for payroll taxes ( 36,410 ) — ( 1,550 ) — — ( 1,550 )

Shares repurchased ( 100,954 ) ( 1 ) ( 3,400 ) — — ( 3,401 )

Net income — — — 16,628 — 16,628

BALANCE — June 27, 2021 20,946,404 $ 210 $ 47,069 $ 227,926 $ — $ 275,205

Cash dividends declared and paid — — — ( 2,756 ) — ( 2,756 )

Share-based compensation expense — — 862 — — 862

Vesting of restricted stock 11,228 — — — — —

ESPP shares issued 32,768 — 986 — — 986

Shares repurchased ( 181,657 ) ( 2 ) ( 6,555 ) — — ( 6,557 )

Net income — — — 14,133 — 14,133

BALANCE — September 26, 2021 20,888,923 $ 209 $ 44,801 $ 239,303 $ — $ 284,313

Cash dividends declared and paid — — — ( 2,745 ) — ( 2,745 )

Share-based compensation expense — — 1,046 — — 1,046

Shares repurchased ( 30,538 ) — ( 1,124 ) — — ( 1,124 )

Other comprehensive income, net of tax — — — — 465 465

Net income — — — 19,695 — 19,695

BALANCE — December 26, 2021 20,858,385 $ 209 $ 44,723 $ 246,762 $ — $ 291,694

BALANCE — July 3, 2022 20,807,338 $ 208 $ 40,192 $ 271,121 $ 1,756 $ 313,277

Common Stock Additional

4 unchanged sentences

BALANCE — March 28, 2021 20,969,746 $ 210 $ 51,138 $ 213,898 $ — $ 265,246

Cash dividends declared and paid — — — ( 2,479 ) — ( 2,479 )

Cash dividends declared and paid ($ 0.1225 per share)

— — — ( 2,600 ) — ( 2,600 )

Share-based compensation expense — — 799 — — 799

1 unchanged sentence

Shares surrendered for payroll taxes ( 45,390 ) — ( 1,467 ) — — ( 1,467 )

Other comprehensive loss, net of tax — — — — ( 10 ) ( 10 )

Net income — — — 11,788 — 11,788

BALANCE — June 28, 2020 21,031,670 $ 211 $ 51,051 $ 192,256 $ ( 89 ) $ 243,429

Cash dividends declared and paid — — — ( 2,480 ) — ( 2,480 )

Share-based compensation expense — — 686 — — 686

Vesting of restricted stock 16,016 — — — — —

ESPP shares issued 42,720 — 773 — — 773

Other comprehensive income, net of tax — — — — 39 39

Net income — — — 12,190 — 12,190

BALANCE — September 27, 2020 21,090,406 $ 211 $ 52,510 $ 201,966 $ ( 50 ) $ 254,637

Cash dividends declared and paid — — — ( 2,471 ) — ( 2,471 )

Share-based compensation expense — — 918 — — 918

Shares repurchased ( 100,954 ) ( 1 ) ( 3,400 ) — — ( 3,401 )

Other comprehensive income, net of tax — — — — 50 50

Net income — — — 16,628 — 16,628

BALANCE — December 27, 2020 20,924,318 $ 209 $ 49,290 $ 207,416 $ — $ 256,915

BALANCE — June 27, 2021 20,946,404 $ 210 $ 47,069 $ 227,926 $ — $ 275,205

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

2021 December 27,

Three Months Ended

2022 June 27,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Operating leases 476 481

Gain on deferred compensation assets ( 548 ) ( 1,282 )

Loss (Gain) on deferred compensation assets 763 ( 232 )

Stock compensation expense 595 799

Other 379 170

Changes in operating accounts providing (using) cash:

6 unchanged sentences

Other 1,466 8

Net cash provided by operating activities 38,709 26,606

Net cash (used in) provided by operating activities ( 9,395 ) 14,821

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant, and equipment ( 11,640 ) ( 2,155 )

Acquisitions ( 2,575 ) ( 35,017 )

Other 230 154

Net cash used in investing activities ( 11,527 ) ( 2,129 )

6 unchanged sentences

Proceeds from revolving loan borrowings 40,000 —

Net cash (used in) provided by financing activities ( 224 ) 25,149

Net cash provided by (used in) financing activities 23,421 ( 10,468 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,499 2,224

2 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for income taxes $ 15,208 $ 12,345

Cash paid for interest $ 721 $ 292

6 unchanged sentences

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 28, 2021 , previously filed with the Securities and Exchange Commission (“SEC”).

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 April 3, 2022 , 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.

1 unchanged sentence

All significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the nine months ended December 26, 2021 are not necessarily indicative of the results that may be expected for the full year.

References to fiscal 2020 refer to the fiscal year ended March 29, 2020, references to fiscal 2021 refer to the fiscal year ended March 28, 2021 and references to fiscal 2022 refer to the fiscal year ending April 3, 2022.

As compared to our normal 52-week fiscal years, fiscal 2022 will be a 53-week year, with the extra week to be recorded in our fourth quarter's results of operations.

The results of operations for the three months ended July 3, 2022 are not necessarily indicative of the results that may be expected for the full year.

References to fiscal 2022 refer to the fiscal year ended April 3, 2022 and references to fiscal 2023 refer to the fiscal year ending April 2, 2023.

Use of Estimates.

2 unchanged sentences

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 28, 2021 , previously filed with the SEC.

There has been no significant change in our accounting policies since the end of fiscal 2022.

Note 2 — Acquisitions

Acquisition of NAPCO Chemical Company, Inc.:

In the fourth quarter of fiscal 2022, we acquired substantially all the assets of NAPCO Chemical Company, Inc.

("NAPCO"), under the terms of an asset purchase agreement with NAPCO and certain other parties thereto, to further the geographic reach of our Water Treatment segment.

We paid $ 18.5 million at closing for the acquisition, and an additional $ 0.5 million for a working capital adjustment.

NAPCO manufactured and distributed water treatment chemicals from three locations in Texas.

The results of operations since the acquisition date, and the assets, including the goodwill associated with this acquisition, are included in our Water Treatment segment.

Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of Water and Waste Specialties, Inc.:

On October 29, 2021, we acquired substantially all the assets of Water and Waste Specialties, Inc., under the terms of a purchase agreement with Water and Waste Specialties and its shareholders.

In the third quarter of fiscal 2022, we acquired substantially all the assets of Water and Waste Specialties, Inc., under the terms of a purchase agreement with Water and Waste Specialties and its shareholders.

We paid $ 1.4 million at closing for the acquisition.

2 unchanged sentences

Costs associated with this transaction were not material and were expensed as incurred.

The acquisition has been accounted for under the acquisition method of accounting, under which the total purchase price is allocated to the net tangible and intangible assets and liabilities of Water and Waste Specialties acquired in connection with the acquisition based on their estimated fair values.

We estimated the fair values of the assets acquired and liabilities assumed using a discounted cash flow analysis (income approach).

Of the total $ 1.4 million purchase price, we allocated $ 0.5 million to finite-lived intangible assets, primarily customer relationships to be amortized over 11 years, and $ 0.4 million to property, plant and equipment.

The residual amount of $ 0.5 million was allocated to goodwill.

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.

Acquisition of Southeast Water Systems LLC:

On September 20, 2021, we acquired substantially all the assets of Southeast Water Systems LLC, under the terms of an asset purchase agreement with Southeast Water Systems and its shareholders.

In the second quarter of fiscal 2022, we acquired substantially all the assets of Southeast Water Systems LLC, under the terms of an asset purchase agreement with Southeast Water Systems and its shareholders.

We paid $ 1.2 million at closing for the acquisition and may pay up to an additional $ 1.0 million over the next three years based on achieving certain goals.

2 unchanged sentences

Costs associated with this transaction were not material and were expensed as incurred.

The acquisition has been accounted for under the acquisition method of accounting, under which the total purchase price is allocated to the net tangible and intangible assets and liabilities of Southeast Water Systems acquired in connection with the acquisition based on their estimated fair values.

We estimated the fair values of the assets acquired and liabilities assumed using a discounted cash flow analysis (income approach).

Of the total $ 2.2 million purchase price, which includes a contingent consideration liability of $ 1.0 million, we allocated $ 0.4 million to finite-lived intangible assets, primarily customer relationships to be amortized over 10 years, and $ 0.1 million to property, plant and equipment.

The residual amount of $ 1.7 million was allocated to goodwill.

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.

Acquisitions of C&L Aqua Professionals, Inc.

and LC Blending, Inc.

In the fourth quarter of fiscal 2021, we acquired substantially all the assets of C&L Aqua Professionals, Inc.

and LC Blending, Inc.

(together, "C&L Aqua") under the terms of an asset purchase agreement among us, C&L Aqua and its shareholders.

We paid $ 16 million for the acquisition.

C&L Aqua was a water treatment chemical distribution company operating primarily in Louisiana.

The results of operations since the acquisition date, and the assets, including the goodwill associated with this acquisition, are included in our Water Treatment segment.

Costs associated with this transaction were not material and were expensed as incurred.

Acquisition of Property :

In the third quarter of fiscal 2021, we acquired a manufacturing facility on 28 acres located adjacent to our facility in Rosemount, Minnesota to allow further expansion and growth in both our Industrial and Water Treatment segments.

We paid $ 10 million for the property.

The purchase of this facility added approximately 40,000 square feet of manufacturing and warehouse space to bring us to a total of 105,000 square feet of space on 56 acres of land in the area, with rail access at both of the sites to allow for future growth and provide for supply chain flexibility on certain raw materials to better serve our customers.

Acquisition of American Development Corporation of Tennessee, Inc.

In the second quarter of fiscal 2021, we acquired substantially all the assets of American Development Corporation of Tennessee, Inc.

(“ADC”) under the terms of an asset purchase agreement among us, ADC and its shareholders.

We paid $ 25 million for the acquisition.

ADC was a water treatment chemical distribution company operating primarily in Tennessee, Georgia and Kentucky.

The results of operations since the acquisition date, and the assets, including the goodwill associated with this acquisition, are included in our Water Treatment segment.

Costs associated with this transaction were not material and were expensed as incurred.

Note 3 - Revenue

3 unchanged sentences

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 26, 2021 and December 27, 2020:

Three months ended December 26, 2021

The following tables disaggregate external customer net sales by major revenue stream for the three months ended July 3, 2022 and June 27, 2021:

Three months ended July 3, 2022

(In thousands) Industrial Water

1 unchanged sentence

Nutrition Total

Bulk / Distributed specialty products (1)

$ 15,659 $ 4,689 $ 29,082 $ 49,430

Manufactured, blended or repackaged products (1)

$ 101,612 $ 70,357 $ 11,961 $ 183,930

Other 1,990 826 ( 92 ) 2,724

Total external customer sales $ 100,554 $ 49,756 $ 36,740 $ 187,050

Three months ended December 27, 2020

(In thousands) Industrial Water

Treatment Health and

Nutrition Total

Bulk / Distributed specialty products (1)

Distributed specialty products (2)

— — 31,089 31,089

Manufactured, blended or repackaged products (2)

Bulk products (3)

20,455 6,790 — 27,245

1 unchanged sentence

Total external customer sales $ 124,710 $ 78,490 $ 43,343 $ 246,543

Nine months ended December 26, 2021

Three months ended June 27, 2021

(In thousands) Industrial Water

1 unchanged sentence

Nutrition Total

Bulk / Distributed specialty products (1)

$ 41,165 $ 14,484 $ 90,086 $ 145,735

Manufactured, blended or repackaged products (1)

$ 72,566 $ 51,228 $ 8,051 $ 131,845

Other 4,786 1,779 121 6,686

Total external customer sales $ 269,572 $ 168,105 $ 113,891 $ 551,568

Nine months ended December 27, 2020

(In thousands) Industrial Water

Treatment Health and

Nutrition Total

Bulk / Distributed specialty products (1)

Distributed specialty products (2)

— — 30,942 30,942

Manufactured, blended or repackaged products (2)

Bulk products (3)

11,843 4,553 — 16,396

1 unchanged sentence

Total external customer sales $ 85,850 $ 56,238 $ 39,153 $ 181,241

(1) For our Industrial and Water Treatment segments, this line includes our bulk products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities.

For our Health and Nutrition segment, this line includes our non-manufactured distributed specialty products, which may be sold out of one of our facilities or direct shipped to our customers.

(1) For our Industrial and Water Treatment segments, this line includes our non-bulk specialty products that we either manufacture, blend, repackage, resell in their original form, or direct ship to our customers in smaller quantities, and services we provide for our customers.

For our Health and Nutrition segment, this line includes products manufactured, processed or repackaged in our facility and/or with our equipment.

(2) This line includes non-manufactured distributed specialty products in our Health and Nutrition segment, which may be sold out of one of our facilities or direct shipped to our customers.

(3) This line includes bulk products in our Industrial and Water Treatment segments that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities.

Note 4 – Earnings per Share

2 unchanged sentences

Basic and diluted EPS were calculated using the following:

Three Months Ended Nine Months Ended

December 26, 2021 December 27, 2020 December 26, 2021 December 27, 2020

Three Months Ended

July 03, 2022 June 27, 2021

Weighted-average common shares outstanding—basic 20,908,823 21,034,302

4 unchanged sentences

Our financial assets and liabilities are measured at fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

We classify the inputs used to measure fair value into the following hierarchy:

Quoted prices in active markets for identical assets or liabilities.

Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for the asset or liability.

Unobservable inputs for the asset or liability that are supported by little or no market activity.

These fair values are determined using pricing models for which the assumptions utilize management’s estimates or market participant assumptions.

The carrying value of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these instruments.

Because of the variable-rate nature of our debt under our credit facility, our debt also approximates fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis.

2 unchanged sentences

Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

Our financial assets that are measured at fair value on a recurring basis are assets held in a deferred compensation retirement plan.

As of December 26, 2021 and March 28, 2021, the assets held in a deferred compensation retirement plan were classified as other long-term assets on our balance sheet, with the portion of the plan assets expected to be paid within twelve months classified as current assets on our balance sheet.

Our financial assets that are measured at fair value on a recurring basis are an interest rate swap and assets held in a deferred compensation retirement plan.

Both of these assets are classified as other long-term assets on our balance sheet, with the portion of the deferred compensation retirement plan assets expected to be paid within twelve months classified as current assets.

The fair value of the interest rate swap is determined by the respective counterparties based on interest rate changes.

Interest rate swaps are valued based on observable interest rate yield curves for similar instruments.

The deferred compensation plan assets relate to contributions made to a non-qualified compensation plan on behalf of certain employees who are classified as “highly compensated employees” as determined by IRS guidelines.

1 unchanged sentence

The fair value of the deferred compensation is based on the quoted market prices for the mutual funds at the end of the period.

Our financial liability that is measured at fair value on a recurring basis consists of a contingent earnout liability in connection with our acquisition of Southeast Water Systems LLC.

The contingent earnout liability was classified as other long-term liabilities on our balance sheet, with the portion of the contingent earnout liability expected to be paid within 12 months classified as current liabilities on our balance sheet.

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of December 26, 2021 and March 28, 2021.

(In thousands) December 26, 2021 March 28, 2021

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of July 3, 2022 and April 3, 2022.

(In thousands) July 3, 2022 April 3, 2022

Deferred compensation plan assets Level 1 $ 7,632 $ 7,038

Contingent consideration liability Level 3 $ 970 $ —

Note 6– Assets Held for Sale

Included in assets held for sale as of March 28, 2021 was $ 0.7 million for an office building in St.

Louis, Missouri which was utilized in the administration of our Industrial segment and $ 0.2 million for a former water treatment branch located in Eldridge, Iowa, which has been relocated to another owned facility.

Both were sold in the first quarter of fiscal 2022.

These amounts were recorded as assets held for sale within prepaid expenses and other current assets on our balance sheet.

Interest rate swap Level 2 $ 2,406 $ 1,769

Note 6 – Inventories

Inventories at December 26, 2021 and March 28, 2021 consisted of the following:

2021 March 28,

Inventories at July 3, 2022 and April 3, 2022 consisted of the following:

2022 April 3,

(In thousands)

2 unchanged sentences

Net inventory $ 104,988 $ 94,985

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 64.3 million at December 26, 2021 and $ 46.8 million at March 28, 2021.

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 93.9 million at July 3, 2022 and $ 83.7 million at April 3, 2022.

The remainder of the inventory was valued and accounted for under the FIFO method.

Note 7 – Goodwill and Intangible Assets

The carrying amount of goodwill was $ 72.9 million as of December 26, 2021 and $ 70.7 million as of March 28, 2021, of which $ 44.9 million was related to our Health and Nutrition segment, $ 21.5 million was related to our Water Treatment segment, and $ 6.5 million was related to our Industrial segment.

The increase in goodwill during the nine months ended December 26, 2021 represents goodwill recorded in connection with the acquisitions of the assets of Southeast Water Systems and Water and Waste Specialties as discussed in Note 2.

A summary of our intangible assets as of December 26, 2021 and March 28, 2021 is as follows:

December 26, 2021 March 28, 2021

The carrying amount of goodwill was $ 77.4 million as of July 3, 2022 and April 3, 2022, of which $ 44.9 million was related to our Health and Nutrition segment, $ 26.0 million was related to our Water Treatment segment, and $ 6.5 million was related to our Industrial segment.

A summary of our intangible assets as of July 3, 2022 and April 3, 2022 is as follows:

July 3, 2022 April 3, 2022

(In thousands) Gross

11 unchanged sentences

Note 8 – Debt

Debt at December 26, 2021 and March 28, 2021 consisted of the following:

2021 March 28,

Debt at July 3, 2022 and April 3, 2022 consisted of the following:

2022 April 3,

(In thousands)

4 unchanged sentences

Total long-term debt $ 149,166 $ 115,644

We were in compliance with all covenants of the Credit Agreement as of December 26, 2021.

We were in compliance with all covenants of our credit agreement as of July 3, 2022.

Note 9 – Income Taxes

1 unchanged sentence

federal income tax as well as income tax of multiple state jurisdictions.

The tax years prior to our fiscal year ended April 1, 2018 are closed to examination by the Internal Revenue Service, and with few exceptions, state and local

income tax jurisdictions.

Our effective tax rate was approximately 26 % for both the nine months ended December 26, 2021 and for the nine months ended December 27, 2020.

The tax years prior to our fiscal year ended March 31, 2019 are closed to examination by the Internal Revenue Service, and with few exceptions, state and local income tax jurisdictions.

Our effective income tax rate was 25 % for the current quarter, compared to 24 % for the three months ended June 27, 2021.

The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.

1 unchanged sentence

Lease Obligations.

As of December 26, 2021, we were obligated under operating lease agreements for certain manufacturing facilities, warehouse space, the land on which some of our facilities sit, vehicles and information technology equipment.

As of July 3, 2022, we were obligated under operating lease agreements for certain manufacturing facilities, warehouse space, the land on which some of our facilities sit, vehicles and information technology equipment.

Our leases have remaining original lease terms of 1 year to 22 years, some of which include options to extend the lease for up to 10 years .

As of December 26, 2021, our operating lease components with initial or remaining terms in excess of one year were classified on the condensed consolidated balance sheet within right of use assets, short-term lease liability and long-term lease liability.

Expense for leases less than 12 months was no t material for the three and nine months ended December 26, 2021 and December 27, 2020.

Total lease expense was $ 0.7 million for both the three months ended December 26, 2021 and December 27, 2020, and was $ 2.1 million for both the nine months ended December 26, 2021 and December 27, 2020.

As of July 3, 2022, our operating lease components with initial or remaining terms in excess of one year were classified on the condensed consolidated balance sheet within right of use assets, short-term lease liability and long-term lease liability.

Expense for leases less than 12 months was no t material for the three months ended July 3, 2022 and June 27, 2021.

Total lease expense was $ 0.8 million and $ 0.7 million for the three months ended July 3, 2022 and June 27, 2021.

Other information related to our operating leases was as follows:

December 26, 2021 March 28, 2021

July 3, 2022 April 3, 2022

Lease Term and Discount Rate

1 unchanged sentence

Weighted average discount rate 2.5 % 2.6 %

Maturities of lease liabilities as of December 26, 2021 were as follows:

Maturities of lease liabilities as of July 3, 2022 were as follows:

(In thousands) Operating Leases

15 unchanged sentences

We are recording the compensation expense for the outstanding performance share units and the converted restricted stock over the life of the awards.

The following table represents the restricted stock activity for the nine months ended December 26, 2021:

The following table represents the restricted stock activity for the three months ended July 3, 2022:

Shares Weighted-

4 unchanged sentences

Vested ( 102,860 ) 18.69

Forfeited or expired ( 10,884 ) 34.68

Unvested at end of period 189,258 $ 34.64

We recorded compensation expense related to performance share units and restricted stock of $ 0.8 million and $ 2.0 million for the three and nine months ended December 26, 2021, respectively.

We recorded compensation expense related to performance share units and restricted stock of $ 0.7 million and $ 1.6 million for the three and nine months ended December 27, 2020, respectively.

We recorded compensation expense related to performance share units and restricted stock of $ 0.4 million for the three months ended July 3, 2022 and $ 0.6 million for the three months ended June 27, 2021.

Substantially all of the compensation expense was recorded in selling, general and administrative expenses in the condensed consolidated statements of income.

2 unchanged sentences

The restricted stock awards are generally expensed over a one-year vesting period, based on the market value on the date of grant.

As of December 26, 2021, there were 10,287 shares of restricted stock with an average grant date fair value of $ 32.80 outstanding under this program.

Compensation expense for both the three months ended December 26, 2021 and December 27, 2020 related to restricted stock awards to the Board was $ 0.1 million.

Compensation expense for both the nine months ended December 26, 2021 and December 27, 2020 related to restricted stock awards to the Board was $ 0.2 million.

As of July 3, 2022, there were 10,287 shares of restricted stock with an average grant date fair value of $ 32.80 outstanding under this program.

Compensation expense for both the three months ended July 3, 2022 and June 27, 2021 related to restricted stock awards to the Board was $ 0.1 million.

Note 12 – Share Repurchase Program

Our Board has authorized the repurchase of up to 1.6 million shares of our outstanding common stock for cash on the open market or in privately negotiated transactions subject to applicable securities laws and regulations.

As of July 3, 2022, our Board had authorized the repurchase of up to 1.6 million shares of our outstanding common stock for cash on the open market or in privately negotiated transactions subject to applicable securities laws and regulations.

Upon purchase of the shares, we reduce our common stock for the par value of the shares with the excess applied against additional paid-in capital.

During the three months ended December 26, 2021, we repurchased 30,538 shares at an aggregate purchase price of $ 1.1 million.

During the nine months ended December 26, 2021, we repurchased 240,501 shares at an aggregate purchase price of $ 8.5 million.

During the three and nine months ended December 27, 2020, we repurchased 166,088 shares at an aggregate purchase price of $ 4.1 million.

As of December 26, 2021, 311,005 shares remained available to be repurchased under the share repurchase program.

During the three months ended July 3, 2022, we repurchased 181,657 shares at an aggregate purchase price of $ 6.6 million.

During the three months ended June 27, 2021, we repurchased 100,954 shares at an aggregate purchase price of $ 3.4 million.

As of July 3, 2022, 129,348 shares remained available to be repurchased under the share repurchase program.

On August 4, 2022, our Board increased the number of shares authorized to be repurchased to 2.6 million.

Accordingly, as of August 4, 2022, 1,129,348 shares remain available to be repurchased under the share repurchase program.

Note 13 – Segment Information

1 unchanged sentence

Industrial, Water Treatment, and Health and Nutrition.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the fiscal year ended March 28, 2021 .

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the fiscal year ended April 3, 2022 .

We evaluate performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses.

7 unchanged sentences

Treatment Health and Nutrition Total

Three months ended December 26, 2021:

Sales $ 100,554 $ 49,756 $ 36,740 $ 187,050

Gross profit 15,303 11,103 7,534 33,940

Selling, general, and administrative expenses 7,367 8,254 4,060 19,681

Operating income 7,936 2,849 3,474 14,259

Three months ended December 27, 2020:

Sales $ 64,356 $ 39,298 $ 39,273 $ 142,927

Gross profit 9,207 10,027 9,005 28,239

Selling, general, and administrative expenses 6,978 6,788 3,984 17,750

Operating income 2,229 3,239 5,021 10,489

Nine months ended December 26, 2021:

Three months ended July 3, 2022:

Sales $ 124,710 $ 78,490 $ 43,343 $ 246,543

2 unchanged sentences

Operating income 13,624 10,252 3,988 27,864

Nine months ended December 27, 2020:

Three months ended June 27, 2021:

Sales $ 85,850 $ 56,238 $ 39,153 $ 181,241

2 unchanged sentences

Operating income 8,013 9,172 4,933 22,118

No significant changes to identifiable assets by segment occurred during the nine months ended December 26, 2021.

Note 15 – Subsequent Events

On December 30, 2021, we acquired substantially all the assets of NAPCO Chemical Company, Inc.

and its affiliates ("NAPCO") for $ 18.5 million, subject to a working capital adjustment, under the terms of an asset purchase agreement among us, NAPCO and certain other parties thereto.

NAPCO manufactures and distributes water treatment chemicals from three locations in Texas.

The results of operations and the assets, including the goodwill associated with this acquisition, will be included as part of our Water Treatment segment from the date of acquisition forward.

The purchase accounting for this acquisition has not yet been completed.

No significant changes to identifiable assets by segment occurred during the three months ended July 3, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements