What changed in this filing

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Item 1. Financial Statements

2024-01-31 compared with 2023-11-01 · 92 added, 59 removed, 352 unchanged (30% of the section changed)

41 unchanged sentences

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

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

20,790,292 and 20,850,454 shares issued and outstanding as of December 31, 2023 and April 2, 2023, respectively

Additional paid-in capital 36,781 44,443

7 unchanged sentences

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

Three Months Ended Six Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended Nine Months Ended

2023 January 1,

2023 December 31,

2023 January 1,

Sales $ 208,496 $ 219,218 $ 696,142 $ 706,953

4 unchanged sentences

Interest expense, net ( 1,168 ) ( 1,546 ) ( 3,033 ) ( 3,858 )

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

Other income (expense) 853 465 901 ( 744 )

Income before income taxes 18,159 14,186 81,820 65,065

10 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended Nine Months Ended

2023 January 1,

2023 December 31,

2023 January 1,

Net income $ 14,885 $ 10,733 $ 61,531 $ 48,428

Other comprehensive income, net of tax:

Unrealized gain on interest rate swap 306 1,977 1,055 2,442

Unrealized (loss) gain on interest rate swap ( 1,299 ) ( 139 ) ( 244 ) 2,303

Total comprehensive income $ 13,586 $ 10,594 $ 61,287 $ 50,731

26 unchanged sentences

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 loss, 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

Common Stock Additional

22 unchanged sentences

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

Cash dividends declared and paid ($ 0.14 per share)

— — — ( 2,943 ) — ( 2,943 )

Share-based compensation expense — — 1,084 — — 1,084

ESPP shares issued 32,829 1 1,010 — — 1,011

Other comprehensive income, net of tax — — — — ( 139 ) ( 139 )

Net income — — — 10,733 $ — 10,733

BALANCE — January 1, 2023 20,850,454 $ 209 $ 43,388 $ 293,969 $ 3,594 $ 341,160

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

2023 October 2,

Nine Months Ended

2023 January 1,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Stock compensation expense 3,506 2,764

Other ( 34 ) 187

Changes in operating accounts providing (using) cash:

19 unchanged sentences

Proceeds from revolving loan borrowings 75,000 45,000

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

NET INCREASE IN CASH AND CASH EQUIVALENTS 3,408 428

Net cash used in financing activities ( 13,055 ) ( 9,936 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 1,825 ) 2,650

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

14 unchanged sentences

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

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.

The results of operations for the nine months ended December 31, 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.

6 unchanged sentences

Note 2 — Acquisitions and Asset Sales

Acquisition of The Miami Products & Chemical Company:

On October 31, 2023, 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.

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 Miami Products 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 $ 15.5 million purchase price, $ 8.2 million was allocated to customer lists, to be amortized over 11 years, and $ 0.8 million was allocated to trade names, to be amortized over 10 years.

The remaining amount was allocated to net working capital and property, plant and equipment, with the residual amount of $ 3.1 million 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.

The purchase price allocation is preliminary and subject to adjustment within the first 12 months following the acquisition.

Acquisition of Water Solutions Unlimited, Inc.:

On October 27, 2023, 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.

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 Solutions 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).

The total purchase price was estimated to be $ 70.7 million, including the estimated potential earnout to be paid of $ 10.7 million.

Of the $ 70.7 million purchase price, $ 32.0 million was allocated to customer lists, to be amortized over 13 years, $ 6.4 million was allocated to trade names, to be amortized over 10 years, and $ 0.2 million was allocated to non-compete agreements, to be amortized over five years.

The remaining amount was allocated to net working capital and property, plant and equipment, with the residual amount of $ 21.0 million 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.

The purchase price allocation is preliminary and subject to adjustment within the first 12 months following the acquisition.

Acquisition of EcoTech Enterprises, Inc.:

15 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 six months ended October 1, 2023 and October 2, 2022:

Three months ended October 1, 2023

The following tables disaggregate external customer net sales by major revenue stream for the nine months ended December 31, 2023 and January 1, 2023:

Three months ended December 31, 2023

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 92,990 $ 82,019 $ 33,487 $ 208,496

Three months ended October 2, 2022

Three months ended January 1, 2023

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 114,436 $ 68,549 $ 36,233 $ 219,218

Six months ended October 1, 2023

Nine months ended December 31, 2023

(In thousands) Industrial Water

9 unchanged sentences

Total external customer sales $ 312,398 $ 276,595 $ 107,149 $ 696,142

Six months ended October 2, 2022

Nine months ended January 1, 2023

(In thousands) Industrial Water

17 unchanged sentences

Basic and diluted EPS were calculated using the following:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

December 31, 2023 January 01, 2023 December 31, 2023 January 01, 2023

Weighted-average common shares outstanding—basic 20,781,632 20,818,347 20,864,349 20,847,285

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 October 1, 2023 and April 2, 2023.

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

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and April 2, 2023.

(In thousands) December 31, 2023 April 2, 2023

Deferred compensation plan assets Level 1 $ 9,803 $ 7,659

1 unchanged sentence

Note 6 – Inventories

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

Inventories at December 31, 2023 and April 2, 2023 consisted of the following:

2023 April 2,

3 unchanged sentences

Net inventory $ 68,805 $ 88,777

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 first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 78.7 million at December 31, 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 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

The carrying amount of goodwill was $ 101.5 million as of December 31, 2023 and $ 77.4 million as of April 2, 2023, of which $ 44.9 million was related to our Health and Nutrition segment, $ 50.1 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 31, 2023 represents goodwill recorded in connection with the acquisitions of the assets of Water Solutions and Miami Products as discussed in Note 2.

A summary of our intangible assets as of December 31, 2023 and April 2, 2023 is as follows:

December 31, 2023 April 2, 2023

(In thousands) Gross

11 unchanged sentences

Note 8 – Debt

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

Debt at December 31, 2023 and April 2, 2023 consisted of the following:

2023 April 2,

5 unchanged sentences

Total long-term debt $ 109,797 $ 101,731

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

We were in compliance with all covenants of our credit agreement as of December 31, 2023.

Note 9 – Income Taxes

2 unchanged sentences

The tax years prior to our fiscal year ended March 28, 2021 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 27 % for the six months ended October 1, 2023, compared to 26 % for the six months ended October 2, 2022.

Our effective income tax rate was 25 % for the nine months ended December 31, 2023, compared to 26 % for the nine months ended January 1, 2023.

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 six months ended October 1, 2023:

The following table represents the restricted stock activity for the nine months ended December 31, 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 $ 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.

We recorded compensation expense related to performance share units and restricted stock of $ 1.0 million and $ 2.7 million for the three and nine months ended December 31, 2023, respectively.

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 January 1, 2023, 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 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.

As of December 31, 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 December 31, 2023 and January 1, 2023 related to restricted stock awards to the Board was $ 0.1 million.

Compensation expense related to restricted stock awards to the Board for the nine months ended December 31, 2023 was $ 0.4 million and for the nine months ended January 1, 2023 was $ 0.3 million.

Note 11 – Share Repurchase Program

Our Board had authorized the repurchase of up to 2.6 million shares of our outstanding common shares.

Our Board has authorized the repurchase of up to 2.6 million shares of our outstanding common shares.

The shares may be repurchased 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 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.

During the three months ended December 31, 2023, we repurchased 24,065 shares at an aggregate purchase price of $ 1.5 million.

During the nine months ended December 31, 2023, we repurchased 191,861 shares at an aggregate purchase price of $ 11.3 million.

During the three months ended January 1, 2023, no shares were repurchased, and during the nine months ended January 1, 2023, we repurchased 181,657 shares at an aggregate purchase price of $ 6.6 million.

As of December 31, 2023, 937,487 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 October 1, 2023:

Three months ended December 31, 2023:

Sales $ 92,990 $ 82,019 $ 33,487 $ 208,496

2 unchanged sentences

Operating income 9,203 7,771 1,500 18,474

Three months ended October 2, 2022:

Three months ended January 1, 2023:

Sales $ 114,436 $ 68,549 $ 36,233 $ 219,218

2 unchanged sentences

Operating income 8,016 4,265 2,986 15,267

Six months ended October 1, 2023:

Nine months ended December 31, 2023:

Sales $ 312,398 $ 276,595 $ 107,149 $ 696,142

2 unchanged sentences

Operating income 32,972 44,216 6,764 83,952

Six months ended October 2, 2022:

Nine months ended January 1, 2023:

Sales $ 353,085 $ 233,527 $ 120,341 $ 706,953

2 unchanged sentences

Operating income 32,462 25,939 11,266 69,667

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

Note 13 – Subsequent Events

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.

No significant changes to identifiable assets by segment occurred during the nine months ended December 31, 2023.

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