What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-02 · 113 added, 37 removed, 298 unchanged (33% of the section changed)

41 unchanged sentences

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

20,942,857 and 20,850,454 shares issued and outstanding as of July 2, 2023 and April 2, 2023, respectively

20,787,626 and 20,850,454 shares issued and outstanding as of October 1, 2023 and April 2, 2023, respectively

Additional paid-in capital 35,918 44,443

7 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Sales $ 236,526 $ 241,192 $ 487,646 $ 487,735

4 unchanged sentences

Interest expense, net ( 717 ) ( 1,383 ) ( 1,865 ) ( 2,312 )

Other income (expense) 337 ( 763 )

Other (expense) income ( 289 ) ( 446 ) 48 ( 1,209 )

Income before income taxes 31,985 24,707 63,661 50,879

10 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Net income $ 23,216 $ 18,000 $ 46,646 $ 37,695

21 unchanged sentences

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

Common Stock Additional

14 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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

2023 October 2,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Stock compensation expense 2,219 1,680

Other ( 34 ) 187

Changes in operating accounts providing (using) cash:

6 unchanged sentences

Other 3,430 2,425

Net cash provided by (used in) operating activities 34,866 ( 9,395 )

Net cash provided by operating activities 92,630 18,803

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant, and equipment ( 16,922 ) ( 20,668 )

Acquisitions ( 3,355 ) —

Other 335 296

Net cash used in investing activities ( 19,942 ) ( 20,372 )

7 unchanged sentences

Net cash (used in) provided by financing activities ( 69,280 ) 1,997

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 516 ) 2,499

NET INCREASE IN CASH AND CASH EQUIVALENTS 3,408 428

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,566 3,496

1 unchanged sentence

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for income taxes $ 16,025 $ 11,148

Cash paid for interest $ 2,002 $ 1,879

10 unchanged sentences

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

The results of operations for the three months ended July 2, 2023 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 1, 2023 are not necessarily indicative of the results that may be expected for the full year.

References to fiscal 2023 refer to the fiscal year ended April 2, 2023 and references to fiscal 2024 refer to the fiscal year ending March 31, 2024.

5 unchanged sentences

There has been no significant change in our accounting policies since the end of fiscal 2023.

Note 2 — Asset Sales

Note 2 — Acquisitions and Asset Sales

Acquisition of EcoTech Enterprises, Inc.:

On July 14, 2023, 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 $ 3.4 million purchase price was allocated primarily to customer lists, to be amortized over 10 years, property, plant and equipment, and net working capital.

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.

Sale of bleach packaging assets:

8 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 2, 2023 and July 3, 2022:

Three months ended July 2, 2023

The following tables disaggregate external customer net sales by major revenue stream for the six months ended October 1, 2023 and October 2, 2022:

Three months ended October 1, 2023

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 98,535 $ 100,925 $ 37,066 $ 236,526

Three months ended July 3, 2022

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

Six months ended October 1, 2023

(In thousands) Industrial Water

Treatment Health and

Nutrition Total

Manufactured, blended or repackaged products (1)

$ 186,565 $ 175,749 $ 21,099 $ 383,413

Distributed specialty products (2)

— — 52,267 52,267

Bulk products (3)

28,359 16,081 — 44,440

Other 4,484 2,746 296 7,526

Total external customer sales $ 219,408 $ 194,576 $ 73,662 $ 487,646

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

(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 02, 2023 July 03, 2022

Three Months Ended Six Months Ended

October 01, 2023 October 02, 2022 October 01, 2023 October 02, 2022

Weighted-average common shares outstanding—basic 20,903,690 20,814,686 20,905,707 20,861,754

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 2, 2023 and April 2, 2023.

(In thousands) July 2, 2023 April 2, 2023

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of October 1, 2023 and April 2, 2023.

(In thousands) October 1, 2023 April 2, 2023

Deferred compensation plan assets Level 1 $ 9,058 $ 7,659

1 unchanged sentence

Note 6 – Inventories

Inventories at July 2, 2023 and April 2, 2023 consisted of the following:

Inventories at October 1, 2023 and April 2, 2023 consisted of the following:

2023 April 2,

3 unchanged sentences

Net inventory $ 68,500 $ 88,777

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 90.8 million at July 2, 2023 and $ 101.4 million at April 2, 2023.

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 83.9 million at October 1, 2023 and $ 101.4 million at April 2, 2023.

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 2, 2023 and April 2, 2023, 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 2, 2023 and April 2, 2023 is as follows:

July 2, 2023 April 2, 2023

The carrying amount of goodwill was $ 77.4 million as of October 1, 2023 and April 2, 2023, 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 1, 2023 and April 2, 2023 is as follows:

October 1, 2023 April 2, 2023

(In thousands) Gross

6 unchanged sentences

Trademarks and trade names $ 6,370 $ ( 5,467 ) $ 903 $ 6,370 $ ( 5,267 ) $ 1,103

Other finite-life intangible assets 3,941 ( 3,913 ) 28 3,904 ( 3,904 ) —

Total finite-life intangible assets 121,205 ( 50,941 ) 70,264 119,381 ( 47,548 ) 71,833

2 unchanged sentences

Note 8 – Debt

Debt at July 2, 2023 and April 2, 2023 consisted of the following:

Debt at October 1, 2023 and April 2, 2023 consisted of the following:

2023 April 2,

5 unchanged sentences

Total long-term debt $ 49,775 $ 101,731

We were in compliance with all covenants of our credit agreement as of July 2, 2023.

We were in compliance with all covenants of our credit agreement as of October 1, 2023.

Note 9 – Income Taxes

2 unchanged sentences

The tax years prior to our fiscal year ended March 29, 2020 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 26 % for the three months ended July 2, 2023, compared to 25 % for the three months ended July 3, 2022.

Our effective income tax rate was 27 % for the six months ended October 1, 2023, compared to 26 % for the six months ended October 2, 2022.

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

6 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 2, 2023:

The following table represents the restricted stock activity for the six months ended October 1, 2023:

Shares Weighted-

5 unchanged sentences

Unvested at end of period 145,477 $ 40.33

We recorded compensation expense related to performance share units and restricted stock of $ 0.7 million for the three months ended July 2, 2023 and $ 0.4 million for the three months ended July 3, 2022.

We recorded compensation expense related to performance share units and restricted stock of $ 1.0 million and $ 1.6 million for the three and six months ended October 1, 2023, respectively.

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.

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

Restricted Stock Awards .

As part of their retainer, our non-employee directors receive restricted stock for their Board services.

As part of their retainer, our directors, other than the Chief Executive Officer, receive restricted stock for their Board services.

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 2, 2023, 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 July 2, 2023 and July 3, 2022 related to restricted stock awards to the Board was $ 0.1 million.

As of October 1, 2023, there were 10,647 shares of restricted stock with an average grant date fair value of $ 46.00 outstanding under this program.

Compensation expense for both the three months ended October 1, 2023 and October 2, 2022 related to restricted stock awards to the Board was $ 0.1 million.

Compensation expense for both the six months ended October 1, 2023 and October 2, 2022 related to restricted stock awards to the Board was $ 0.2 million.

Note 11 – Share Repurchase Program

2 unchanged sentences

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 2, 2023, no shares were repurchased, and during the three months ended July 3, 2022, we repurchased 181,657 shares at an aggregate purchase price of $ 6.6 million.

As of July 2, 2023, 1,129,348 shares remained available to be repurchased under the share repurchase program.

During the three and six months ended October 1, 2023, we repurchased 167,796 shares at an aggregate purchase price of $ 9.8 million.

During the three months ended October 2, 2022, no shares were repurchased, and during the six months ended October 2, 2022, we repurchased 181,657 shares at an aggregate purchase price of $ 6.6 million.

As of October 1, 2023, 961,552 shares remained available to be repurchased under the share repurchase program.

Note 12 – Segment Information

11 unchanged sentences

Treatment Health and Nutrition Total

Three months ended July 2, 2023:

Three months ended October 1, 2023:

Sales $ 98,535 $ 100,925 $ 37,066 $ 236,526

2 unchanged sentences

Operating income 11,038 19,163 2,790 32,991

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

No significant changes to identifiable assets by segment occurred during the three months ended July 2, 2023.

Six months ended October 1, 2023:

Sales $ 219,408 $ 194,576 $ 73,662 $ 487,646

Gross profit 37,150 55,716 13,011 105,877

Selling, general and administrative expenses 13,381 19,271 7,747 40,399

Operating income 23,769 36,445 5,264 65,478

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

No significant changes to identifiable assets by segment occurred during the six months ended October 1, 2023.

Note 13 – Subsequent Events

In July 2023, we acquired substantially all the assets of EcoTech Enterprises, Inc.

("EcoTech") for $ 3.4 million, under the terms of an asset purchase agreement with EcoTech and its shareholders.

EcoTech is a manufacturer and distributor of water treatment chemicals serving customers throughout Arkansas and surrounding states.

In October 2023, we acquired substantially all the assets of Water Solutions Unlimited, Inc.

("Water Solutions") for $ 60 million and up to an additional $ 15 million to be paid after three years based on achieving certain targets, under the terms of an asset purchase agreement with Water Solutions and its shareholders.

Water Solutions is a manufacturer and distributor of water treatment chemicals serving customers primarily throughout Indiana, Illinois and Michigan.

The results of operations and the assets, including goodwill associated with this acquisition, if any, 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.

In October 2023, we acquired substantially all the assets of Miami Products & Chemical Company ("Miami Products") for $ 15.5 million, under the terms of an asset 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 and the assets, including goodwill associated with this acquisition, if any, 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.

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