What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-04 · 105 added, 48 removed, 326 unchanged (32% of the section changed)

29 unchanged sentences

Short-term lease liability 1,433 1,657

Container deposits 1,557 1,558

Other current liabilities 4,490 4,130

11 unchanged sentences

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

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

20,817,625 and 20,889,777 shares issued and outstanding as of October 2, 2022 and April 3, 2022, respectively

Additional paid-in capital 41,294 46,717

7 unchanged sentences

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

Three Months Ended

2022 June 27,

Three Months Ended Six Months Ended

2022 September 26,

2021 October 2,

2022 September 26,

Sales $ 241,192 $ 183,277 $ 487,735 $ 364,518

17 unchanged sentences

(In thousands)

Three Months Ended

2022 June 27,

Three Months Ended Six Months Ended

2022 September 26,

2021 October 2,

2022 September 26,

Net income $ 18,000 $ 14,133 $ 37,695 $ 30,761

22 unchanged sentences

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

Cash dividends declared and paid ($ 0.14 per share)

— — — ( 2,942 ) — ( 2,942 )

Share-based compensation expense — — 1,085 — — 1,085

Vesting of restricted stock 10,287 — — — — —

ESPP shares issued — — 17 — — 17

Other comprehensive income, net of tax — — — — 1,977 1,977

Net income — — — 18,000 — 18,000

BALANCE — October 2, 2022 20,817,625 $ 208 $ 41,294 $ 286,179 $ 3,733 $ 331,414

Common Stock Additional

12 unchanged sentences

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

Cash dividends declared and paid ($ 0.13 per share)

— — — ( 2,756 ) — ( 2,756 )

Share-based compensation expense — — 862 — — 862

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

ESPP shares issued 40,300 — 889 — — 889

Shares repurchased ( 109,009 ) ( 1 ) ( 4,019 ) — — ( 4,020 )

Net income — — — 14,133 — 14,133

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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

2022 June 27,

Six Months Ended

2022 September 26,

CASH FLOWS FROM OPERATING ACTIVITIES:

13 unchanged sentences

Other 2,425 1,261

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

Net cash provided by operating activities 18,803 40,082

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant, and equipment ( 20,668 ) ( 6,904 )

Acquisitions — ( 1,200 )

Other 296 181

Net cash used in investing activities ( 20,372 ) ( 7,923 )

11 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for income taxes $ 11,148 $ 9,650

Cash paid for interest $ 1,879 $ 563

10 unchanged sentences

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

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.

The results of operations for the six months ended October 2, 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.

8 unchanged sentences

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") for $ 19.0 million, 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.

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

2 unchanged sentences

Acquisition of Water and Waste Specialties, Inc.:

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.

In the third quarter of fiscal 2022, we acquired substantially all the assets of Water and Waste Specialties, Inc.

for $ 1.4 million, under the terms of a purchase agreement with Water and Waste Specialties and its shareholders.

Water and Waste Specialties was a water treatment chemical distribution company operating primarily in Alabama.

12 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 months ended July 3, 2022 and June 27, 2021:

Three months ended July 3, 2022

The following tables disaggregate external customer net sales by major revenue stream for the three and six months ended October 2, 2022 and September 26, 2021:

Three months ended October 2, 2022

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 113,939 $ 86,488 $ 40,765 $ 241,192

Three months ended June 27, 2021

Three months ended September 26, 2021

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 83,168 $ 62,111 $ 37,998 $ 183,277

Six months ended October 2, 2022

(In thousands) Industrial Water

Treatment Health and

Nutrition Total

Manufactured, blended or repackaged products (1)

$ 195,160 $ 147,529 $ 23,697 $ 366,386

Distributed specialty products (2)

— — 59,766 59,766

Bulk products (3)

38,587 14,510 — 53,097

Other 4,902 2,939 645 8,486

Total external customer sales $ 238,649 $ 164,978 $ 84,108 $ 487,735

Six months ended September 26, 2021

(In thousands) Industrial Water

Treatment Health and

Nutrition Total

Manufactured, blended or repackaged products (1)

$ 140,716 $ 107,601 $ 15,934 $ 264,251

Distributed specialty products (2)

— — 61,004 61,004

Bulk products (3)

25,506 9,795 — 35,301

Other 2,796 953 213 3,962

Total external customer sales $ 169,018 $ 118,349 $ 77,151 $ 364,518

(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.

6 unchanged sentences

Basic and diluted EPS were calculated using the following:

Three Months Ended

July 03, 2022 June 27, 2021

Three Months Ended Six Months Ended

October 02, 2022 September 26, 2021 October 02, 2022 September 26, 2021

Weighted-average common shares outstanding—basic 20,814,686 20,986,542 20,861,754 21,010,422

17 unchanged sentences

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

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

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of October 2, 2022 and April 3, 2022.

(In thousands) October 2, 2022 April 3, 2022

Deferred compensation plan assets Level 1 $ 7,092 $ 7,038

1 unchanged sentence

Note 6 – Inventories

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

Inventories at October 2, 2022 and April 3, 2022 consisted of the following:

2022 April 3,

3 unchanged sentences

Net inventory $ 113,062 $ 94,985

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 first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 110.3 million at October 2, 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 $ 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

The carrying amount of goodwill was $ 77.4 million as of October 2, 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 October 2, 2022 and April 3, 2022 is as follows:

October 2, 2022 April 3, 2022

(In thousands) Gross

11 unchanged sentences

Note 8 – Debt

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

Debt at October 2, 2022 and April 3, 2022 consisted of the following:

2022 April 3,

5 unchanged sentences

Total long-term debt $ 130,688 $ 115,644

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

We were in compliance with all covenants of our credit agreement as of October 2, 2022.

Note 9 – Income Taxes

2 unchanged sentences

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.

Our effective income tax rate was 26 % for both the six months ended October 2, 2022 and the six months ended September 26, 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 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.

As of October 2, 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 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.

As of October 2, 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 and six months ended October 2, 2022 and September 26, 2021.

Total lease expense was $ 0.7 million for both the three months ended October 2, 2022 and September 26, 2021, and was $ 1.5 million and $ 1.4 million for the six months ended October 2, 2022 and September 26, 2021.

Other information related to our operating leases was as follows:

July 3, 2022 April 3, 2022

October 2, 2022 April 3, 2022

Lease Term and Discount Rate

1 unchanged sentence

Weighted average discount rate 2.6 % 2.6 %

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

Maturities of lease liabilities as of October 2, 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 three months ended July 3, 2022:

The following table represents the restricted stock activity for the six months ended October 2, 2022:

Shares Weighted-

6 unchanged sentences

Unvested at end of period 189,258 $ 34.64

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.

We recorded compensation expense related to performance share units and restricted stock of $ 0.8 million and $ 1.2 million for the three and six months ended October 2, 2022, respectively.

We recorded compensation expense related to performance share units and restricted stock of $ 0.6 million and $ 1.2 million for the three and six months ended September 26, 2021, respectively.

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 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.

As of October 2, 2022, there were 12,565 shares of restricted stock with an average grant date fair value of $ 38.98 outstanding under this program.

Compensation expense for both the three months ended October 2, 2022 and September 26, 2021 related to restricted stock awards to the Board was $ 0.1 million.

Compensation expense for both the six months ended October 2, 2022 and September 26, 2021 related to restricted stock awards to the Board was $ 0.2 million.

Note 12 – Share Repurchase Program

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.

On August 4, 2022, our Board increased the number of shares authorized to be purchased from 1.6 million to 2.6 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 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.

During the three months ended October 2, 2022, no shares were repurchased.

During the six months ended October 2, 2022, we repurchased 181,657 shares at an aggregate purchase price of $ 6.6 million.

During the three months ended September 26, 2021, we repurchased 109,009 shares at an aggregate purchase price of $ 4.0 million.

During the six months ended September 26, 2021, we repurchased 209,963 shares at an aggregate purchase price of $ 7.4 million.

As of October 2, 2022, 1,129,348 shares remained available to be repurchased under the share repurchase program.

Note 13 – Segment Information

11 unchanged sentences

Treatment Health and Nutrition Total

Three months ended July 3, 2022:

Three months ended October 2, 2022:

Sales $ 113,939 $ 86,488 $ 40,765 $ 241,192

2 unchanged sentences

Operating income 10,822 11,422 4,292 26,536

Three months ended June 27, 2021:

Three months ended September 26, 2021:

Sales $ 83,168 $ 62,111 $ 37,998 $ 183,277

2 unchanged sentences

Operating income 6,108 10,113 3,387 19,608

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

Six months ended October 2, 2022:

Sales $ 238,649 $ 164,978 $ 84,108 $ 487,735

Gross profit 37,722 39,457 15,944 93,123

Selling, general and administrative expenses 13,276 17,783 7,664 38,723

Operating income 24,446 21,674 8,280 54,400

Six months ended September 26, 2021:

Sales $ 169,018 $ 118,349 $ 77,151 $ 364,518

Gross profit 26,818 33,752 15,691 76,261

Selling, general and administrative expenses 12,697 14,467 7,371 34,535

Operating income 14,121 19,285 8,320 41,726

No significant changes to identifiable assets by segment occurred during the six months ended October 2, 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