What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 110 added, 37 removed, 371 unchanged (28% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 29,

2024 March 31,

38 unchanged sentences

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

20,734,331 and 20,790,261 shares issued and outstanding as of June 30, 2024 and March 31, 2024, respectively

20,766,764 and 20,790,261 shares issued and outstanding as of September 29, 2024 and March 31, 2024, respectively

Additional paid-in capital 31,060 38,154

7 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Sales $ 247,029 $ 236,526 $ 502,908 $ 487,646

4 unchanged sentences

Interest expense, net ( 1,427 ) ( 717 ) ( 2,690 ) ( 1,865 )

Other income 159 337

Other income (expense) 673 ( 289 ) 832 48

Income before income taxes 32,991 31,985 71,678 63,661

10 unchanged sentences

(In thousands)

Three Months Ended

Three Months Ended Six Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

Net income $ 24,118 $ 23,216 $ 52,997 $ 46,646

21 unchanged sentences

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

Common Stock Additional

13 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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

September 29,

2024 October 1,

CASH FLOWS FROM OPERATING ACTIVITIES:

19 unchanged sentences

Acquisitions ( 25,400 ) ( 3,355 )

Other 357 335

Net cash used in investing activities ( 46,329 ) ( 19,942 )

6 unchanged sentences

Proceeds from revolving loan borrowings 45,000 —

Net cash provided by (used in) financing activities 19,952 ( 27,553 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,734 ( 516 )

Net cash used in financing activities ( 12,514 ) ( 69,280 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 373 3,408

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,153 7,566

1 unchanged sentence

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for income taxes $ 18,340 $ 16,025

Cash paid for interest $ 2,923 $ 2,002

10 unchanged sentences

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

The results of operations for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year.

The results of operations for the six months ended September 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.

34 unchanged sentences

Intercoastal distributes water treatment chemicals and equipment to its customers in Maryland, Delaware and Virginia.

The $ 22.0 million purchase price was preliminarily allocated as follows:

$ 8.5 million to customer relationships, to be amortized over 10 years, $ 9.6 million to goodwill, and the remaining amount to net working capital and property, plant and equipment.

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, $ 7.1 million to goodwill, and the remaining amount to net working capital and property, plant and equipment.

The goodwill recognized as a result of this acquisition is primarily attributable to strategic and synergistic benefits, as well as the assembled workforce.

28 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 June 30, 2024 and July 2, 2023:

Three months ended June 30, 2024

The following tables disaggregate external customer net sales by major revenue stream for the three and six months ended September 29, 2024 and October 1, 2023:

Three months ended September 29, 2024

(In thousands) Water

9 unchanged sentences

Total external customer sales $ 124,528 $ 89,936 $ 32,565 $ 247,029

Three months ended July 2, 2023

Three months ended October 1, 2023

(In thousands) Water

9 unchanged sentences

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

Six months ended September 29, 2024

(In thousands) Water

Treatment Industrial Health and

Nutrition Total

Manufactured, blended or repackaged products (1)

$ 218,535 $ 162,718 $ 11,793 $ 393,046

Distributed specialty products (2)

— — 55,938 55,938

Bulk products (3)

20,672 26,668 — 47,340

Other 2,497 3,752 335 6,584

Total external customer sales $ 241,704 $ 193,138 $ 68,066 $ 502,908

Six months ended October 1, 2023

(In thousands) Water

Treatment Industrial Health and

Nutrition Total

Manufactured, blended or repackaged products (1)

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

Distributed specialty products (2)

— — 52,267 52,267

Bulk products (3)

16,081 28,359 — 44,440

Other 2,746 4,484 296 7,526

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

(1) For our Water Treatment and Industrial 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

June 30, 2024 July 02, 2023

Three Months Ended Six Months Ended

September 29, 2024 October 01, 2023 September 29, 2024 October 01, 2023

Weighted-average common shares outstanding—basic 20,757,397 20,903,690 20,786,938 20,905,707

24 unchanged sentences

Changes in fair value are included in selling, general and administrative expenses in our Consolidated Statements of Income.

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and March 31, 2024.

(In thousands) June 30, 2024 March 31, 2024

The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of September 29, 2024 and March 31, 2024.

(In thousands) September 29, 2024 March 31, 2024

Deferred compensation plan assets Level 1 $ 12,115 $ 10,042

6 unchanged sentences

Fair value adjustments $ 684

Earnout liability at June 30, 2024 $ 11,577

Earnout liability at September 29, 2024

Note 6 – Inventories

Inventories at June 30, 2024 and March 31, 2024 consisted of the following:

Inventories at September 29, 2024 and March 31, 2024 consisted of the following:

September 29,

2024 March 31,

3 unchanged sentences

Net inventory $ 81,565 $ 74,600

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 79.5 million at June 30, 2024 and $ 76.2 million at March 31, 2024.

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $ 79.3 million at September 29, 2024 and $ 76.2 million at March 31, 2024.

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 $ 114.0 million as of June 30, 2024 and $ 103.4 million as of March 31, 2024, of which $ 62.6 million was related to our Water Treatment segment, $ 44.9 million was related to our Health and Nutrition segment, and $ 6.5 million was related to our Industrial segment.

The increase in goodwill during the three months ended June 30, 2024 represents goodwill recorded in connection with the acquisitions of the assets of Intercoastal and Wofford as discussed in Note 2.

The following is a summary of our identifiable intangible assets as of June 30, 2024 and March 31, 2024:

June 30, 2024 March 31, 2024

The carrying amount of goodwill was $ 111.6 million as of September 29, 2024 and $ 103.4 million as of March 31, 2024, of which $ 60.1 million was related to our Water Treatment segment, $ 44.9 million was related to our Health and Nutrition segment, and $ 6.5 million was related to our Industrial segment.

The increase in goodwill during the six months ended September 29, 2024 represents goodwill recorded in connection with the acquisitions of the assets of Intercoastal and Wofford as discussed in Note 2.

The following is a summary of our identifiable intangible assets as of September 29, 2024 and March 31, 2024:

September 29, 2024 March 31, 2024

(In thousands) Gross

11 unchanged sentences

Note 8 – Debt

Debt at June 30, 2024 and March 31, 2024 consisted of the following:

Debt at September 29, 2024 and March 31, 2024 consisted of the following:

September 29,

2024 March 31,

5 unchanged sentences

Total long-term debt $ 93,862 $ 88,818

We were in compliance with all covenants of our credit agreement as of June 30, 2024.

We were in compliance with all covenants of our credit agreement as of September 29, 2024.

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 25 % for the three months ended June 30, 2024, compared to 26 % for the three months ended July 2, 2023.

Our effective income tax rate was 26 % for the six months ended September 29, 2024, compared to 27 % for the six months ended October 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 three months ended June 30, 2024:

The following table represents the restricted stock activity for the six months ended September 29, 2024:

Shares Weighted-

5 unchanged sentences

Unvested at end of period 137,247 $ 61.49

We recorded compensation expense related to performance share units and restricted stock of $ 1.1 million for the three months ended June 30, 2024 and $ 0.7 million for the three months ended July 2, 2023.

We recorded compensation expense related to performance share units and restricted stock of $ 1.5 million and $ 2.6 million for the three and six months ended September 29, 2024, respectively.

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.

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 June 30, 2024, 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 June 30, 2024 and July 2, 2023 related to restricted stock awards to the Board was $ 0.1 million.

As of September 29, 2024, there were 6,734 shares of restricted stock with an average grant date fair value of $ 103.90 outstanding under this program.

Compensation expense for the three and six months ended September 29, 2024 related to restricted stock awards to the Board was $ 0.2 million and $ 0.3 million, respectively.

Compensation expense for the three and six months ended October 1, 2023 related to restricted stock awards to the Board was $ 0.1 million and $ 0.2 million, respectively.

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 June 30, 2024, we repurchased 105,541 shares at an aggregate purchase price of $ 9.1 million, and during the three months ended July 2, 2023, no shares were repurchased.

As of June 30, 2024, 831,946 shares remained available to be repurchased under the share repurchase program.

During the three months ended September 29, 2024, no shares were repurchased, and during the six months ended September 29, 2024, we repurchased 105,541 shares at an aggregate purchase price of $ 9.1 million.

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

As of September 29, 2024, 831,946 shares remained available to be repurchased under the share repurchase program.

Note 12 – Commitments and Contingencies

6 unchanged sentences

While it is possible that additional expense related to the remediation will be incurred in future periods if currently unknown issues arise, we are unable to estimate the extent of any further financial impact.

No expenses were charged against this liability during the three months ended June 30, 2024.

No expenses were charged against this liability during the three and six months ended September 29, 2024.

Note 13 – Segment Information

11 unchanged sentences

Treatment Industrial Health and Nutrition Total

Three months ended June 30, 2024:

Three months ended September 29, 2024:

Sales $ 124,528 $ 89,936 $ 32,565 $ 247,029

2 unchanged sentences

Operating income 20,078 11,316 2,351 33,745

Three months ended July 2, 2023:

Three months ended October 1, 2023:

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

2 unchanged sentences

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

No significant changes to identifiable assets by segment occurred during the three months ended June 30, 2024.

Six months ended September 29, 2024:

Sales $ 241,704 $ 193,138 $ 68,066 $ 502,908

Gross profit 70,545 40,144 14,188 124,877

Selling, general and administrative expenses 29,678 13,591 8,072 51,341

Operating income 40,867 26,553 6,116 73,536

Six months ended October 1, 2023:

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

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

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

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

No significant changes to identifiable assets by segment occurred during the six months ended September 29, 2024.

Note 14 – Subsequent Events

On October 30, 2024, we acquired substantially all the assets of Waterguard, Inc.

("Water Guard") for $ 18 million, under the terms of an asset purchase agreement with Water Guard and its shareholders.

Water Guard is a distributor of water treatment chemicals and equipment serving customers primarily throughout North Carolina.

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