What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-05-14 compared with 2024-05-15 · 203 added, 147 removed, 687 unchanged (34% of the section changed)

17 unchanged sentences

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”).

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Water Solutions, Miami Products, or Industrial Research, wholly-owned subsidiaries, whose financial statements reflect total assets and revenues constituting 15 and 2 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2024.

As indicated in Management’s Report, Water Solutions, Miami Products, and Industrial Research were acquired during fiscal 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Water Solutions, Miami Products, and Industrial Research.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Amerochem or Waterguard, wholly-owned subsidiaries, whose financial statements reflect total assets and revenues constituting less than 10 and less than 2 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended March 30, 2025.

As indicated in Management’s Report, Amerochem and Waterguard were acquired during fiscal 2025.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Amerochem and Waterguard.

Definition and limitations of internal control over financial reporting

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We have audited the accompanying consolidated balance sheets of Hawkins, Inc.

(a Minnesota corporation) and subsidiaries (the “Company”) as of March 31, 2024 and April 2, 2023 and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and April 2, 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

(a Minnesota corporation) and subsidiaries (the “Company”) as of March 30, 2025 and March 31, 2024, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended March 30, 2025, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 30, 2025 and March 31, 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of March 30, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated May 14, 2025 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Critical audit matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Customer relationships acquired with the Water Solutions Unlimited acquisition

As described further in Note 2 to the financial statements, on October 27, 2023 the Company acquired substantially all of the assets of Water Solutions Unlimited, Inc.

The total purchase price consideration was $70.7 million, which allocated $39.0 million to separately identified intangible assets, including customer relationships of $32.4 million.

The determination of the fair value of the customer relationships requires management to make significant estimates and assumptions related to forecasts of future revenues, expenses, and the discount rate applied.

Changes to these assumptions could materially affect the determination of the fair value of the customer relationships.

We identified the fair value assigned to the customer relationships included on the opening balance sheet as a critical audit matter.

The principal considerations for our determination that the valuation of the acquired customer relationships is a critical audit matter is that management utilized significant judgement when estimating the fair value assigned to the customer relationships.

In turn, auditing management’s judgements regarding the assigned fair value involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgements.

Our audit procedures related to the estimated fair value assigned to the acquired customer relationships included the following, among others.

• We obtained an understanding and tested the design of relevant controls within the Company’s process to value acquired customer relationship assets, including the Company’s control over the selection and review of the reasonableness of assumptions used in determining fair value.

• We evaluated the reasonableness of management’s significant assumptions, which included forecasted revenues and operating expenses.

We tested whether these forecasts were reasonable and consistent with historical performance.

• We involved our valuation professionals with specialized skills and knowledge, to evaluate key inputs and assumptions used to determine fair value.

Our valuation professionals compared the discount rate used to value the customer relationships to independently developed discount rates derived from publicly available data for comparable companies.

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

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

March 31, 2024 April 2, 2023

March 30, 2025 March 31, 2024

CURRENT ASSETS:

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Inventories 83,512 74,600

Income taxes receivable 2,864 —

Prepaid expenses and other current assets 7,417 6,596

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Total current liabilities 107,135 103,307

LONG-TERM DEBT 88,818 101,731

LONG-TERM LIABILITIES:

Long-term debt, less current portion 138,906 88,818

Long-term lease liability 10,920 9,530

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Other long-term liabilities 1,367 1,310

Total long-term liabilities 202,440 148,601

Total liabilities 309,575 251,908

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Fiscal Year Ended

March 31, 2024 April 02, 2023 April 03, 2022

March 30, 2025 March 31, 2024 April 02, 2023

Sales $ 974,431 $ 919,162 $ 935,098

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Fiscal Year Ended

March 31, 2024 April 2, 2023 April 3, 2022

March 30, 2025 March 31, 2024 April 2, 2023

Net income $ 84,345 $ 75,363 $ 60,041

Other comprehensive income, net of tax:

Unrealized gain on interest rate swap 175 1,649 1,291

Total other comprehensive income 175 1,649 1,291

Unrealized (loss) gain on interest rate swap ( 1,383 ) 175 1,649

Total other comprehensive (loss) income ( 1,383 ) 175 1,649

Total comprehensive income $ 82,962 $ 75,538 $ 61,690

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Shares Amount

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

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

Cash dividends declared and paid — — — ( 12,001 ) — ( 12,001 )

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

Other comprehensive loss, net of tax — — — — 1,291 1,291

Other comprehensive income, net of tax — — — — 1,649 1,649

Net income — — — 60,041 — 60,041

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Net income — — — 75,363 — 75,363

BALANCE — April 2, 2023 20,850,454 $ 209 $ 44,443 $ 302,424 $ 2,940 $ 350,016

BALANCE — March 31, 2024 20,790,261 $ 208 $ 38,154 $ 364,549 $ 3,115 $ 406,026

Cash dividends declared and paid — — — ( 14,635 ) — ( 14,635 )

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Shares repurchased ( 205,943 ) ( 2 ) ( 20,674 ) — — ( 20,676 )

Other comprehensive income, net of tax — — — — 175 175

Other comprehensive loss, net of tax — — — — ( 1,383 ) ( 1,383 )

Net income — — — 84,345 — 84,345

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Fiscal Year Ended

March 31, 2024 April 2, 2023 April 3, 2022

March 30, 2025 March 31, 2024 April 2, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

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Shares repurchased ( 20,676 ) ( 11,272 ) ( 6,557 )

Payments for debt issuance costs — — ( 287 )

Payments on senior secured revolving loan ( 60,000 ) ( 98,000 ) ( 59,000 )

Borrowings on senior secured revolving loan 110,000 85,000 45,000

Net cash (used in) provided by financing activities ( 37,408 ) ( 32,100 ) 7,417

Net cash provided by (used in) financing activities 14,806 ( 37,408 ) ( 32,100 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 2,050 ) ( 413 ) 4,070

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Nature of Business - We have three reportable segments:

Industrial, Water Treatment and Health and Nutrition.

The Industrial Group specializes in providing industrial chemicals, products and services to industries such as agriculture, chemical processing, electronics, energy, food, pharmaceutical and plating.

This group also manufactures and sells certain food-grade products, including liquid phosphates, lactates and other blended products.

Water Treatment, Industrial, and Health and Nutrition.

The Water Treatment Group specializes in providing chemicals, products, equipment, services and solutions for potable water, municipal and industrial wastewater, industrial process water, non-residential swimming pool water and agricultural water.

This group has the resources and flexibility to treat systems ranging in size from a single small well to a multi-million-gallon-per-day facility.

This group also manufactures and sells certain food-grade products, including liquid phosphates, lactates and other blended products.

Our Health and Nutrition Group specializes in providing ingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food and beverage, personal care, dietary supplement and other nutritional food, health and wellness products.

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Trade Receivables and Concentrations of Credit Risk - Financial instruments, which potentially subject us to a concentration of credit risk, principally consist of trade receivables.

At the beginning of fiscal 2024, our trade receivables were $129.3 million.

We sell our principal products to a large number of customers in many different industries.

As of March 31, 2024, no single customer represented more than 10 % of our total trade receivables.

As of March 30, 2025, we had a significant concentration of credit risk, with a single customer representing approximately 11 % of our total trade receivables.

There are no other concentrations of credit risk with other single customers from a particular service or geographic area that would significantly impact us in the near term.

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Leasehold improvements are amortized over the lesser of their estimated useful lives or the remaining lease term.

Depreciation and amortization expense is recorded in our Consolidated Statements of Income within cost of goods sold and selling, general and administrative expense, depending on the use of the underlying asset.

Depreciation and amortization expense is recorded in our Consolidated Statements of Income within cost of sales and selling, general and administrative expense, depending on the use of the underlying asset.

We recorded depreciation expense of $ 27.2 million for fiscal 2025, $ 23.3 million for fiscal 2024 and $ 20.5 million for fiscal 2023.

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Our annual test for impairment is as of the first day of our fourth fiscal quarter.

As of January 1, 2024, we performed an analysis of qualitative factors for our Industrial, Water Treatment and Health and Nutrition reporting units to determine whether it is more likely than not that the fair value of either of these reporting units was less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

As of December 30, 2024, we performed an analysis of qualitative factors for our Water Treatment, Industrial, and Health and Nutrition reporting units to determine whether it is more likely than not that the fair value of either of these reporting units was less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

Based on management’s analysis of qualitative factors, we determined that it was not necessary to perform a quantitative goodwill impairment test for any of these reporting units.

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Basic and diluted EPS were calculated using the following:

March 31, 2024 April 02, 2023 April 3, 2022

March 30, 2025 March 31, 2024 April 2, 2023

Weighted average common shares outstanding — basic 20,803,872 20,864,348 20,848,077

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For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024.

We are in the process of evaluating the impact of this standard on the disclosures in our financial statements.

The adoption of ASU No.

2023-09 is not expected to have a material impact on the Company's consolidated financial statements but will require disclosure at a lower level of detail when adopted in the Company's Form 10-K for the year ended March 29, 2026 and in periodic reports thereafter.

Recently Adopted Accounting Pronouncements

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07)

Improvements to Reportable Segment Disclosures (ASU No.

In November 2023, the FASB issued accounting standards update No.

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The update requires public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments in this update are effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and are to be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is permitted.

We are in the process of evaluating the impact of this standard on the disclosures in our financial statements.

We adopted this guidance for our annual period ending fiscal 2025.

Our adoption of this ASU impacted the level of detail disclosed in our Segment Information footnote and did not have an impact on the Company's consolidated financial position, results of operations or cash flow.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2 — Acquisitions and Asset Sales

Acquisition of Industrial Research Corporation:

On March 8, 2024, we acquired substantially all the assets of Industrial Research Corporation ("Industrial Research") for $ 4.6 million under the terms of a purchase agreement with Industrial Research and its shareholders.

Industrial Research distributed water treatment chemicals and equipment to customers primarily in central to northern Louisiana, eastern Texas and southern Arkansas.

Note 2 — Acquisitions

Acquisition of Amerochem Corporation:

On January 31, 2025, we acquired substantially all the assets of Amerochem Corporation ("Amerochem") for $ 44.0 million under the terms of a purchase agreement with Amerochem and its shareholders.

Amerochem distributed water treatment chemicals and equipment to its customers primarily throughout North Carolina.

The $ 44.0 million purchase price was allocated as follows:

$ 22.5 million to customer relationships, to be amortized over 18 years;

$ 0.6 million to trade names, to be amortized over two years;

$ 0.1 million to non-compete agreements, to be amortized over two years;

$ 18.7 million to goodwill;

$ 0.2 million to property, plant and equipment;

and the remaining amount to net working capital.

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 not yet complete due to the timing of the acquisition.

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 Industrial Research 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 $ 4.6 million purchase price, $ 2.2 million was allocated to customer relationships, 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 $ 1.7 million allocated to goodwill.

Acquisition of Waterguard, Inc.:

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

("Water Guard") for $ 18.0 million under the terms of a purchase agreement with Water Guard and its shareholders.

Water Guard distributed water treatment chemicals and equipment to its customers primarily throughout North Carolina.

The $ 18.0 million purchase price was allocated as follows:

$ 9.3 million to customer relationships, to be amortized over 15 years;

$ 0.5 million to trade names, to be amortized over two years;

$ 5.1 million to goodwill;

$ 1.2 million to property, plant and equipment;

and the remaining amount to net working capital.

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 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 was 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 relationships, 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 $ 3.2 million allocated to goodwill.

Acquisition of Wofford Water Service, Inc.:

On June 28, 2024, we acquired substantially all the assets of Wofford Water Service, Inc.

("Wofford") for $ 3.4 million under the terms of a purchase agreement with Wofford and its shareholders.

Wofford distributed water treatment chemicals and equipment to customers mainly in Mississippi.

The $ 3.4 million purchase price was allocated at follows:

$ 2.2 million to customer relationships, to be amortized over 10 years;

$ 1.0 million to goodwill;

and the remaining amount was allocated to net working capital.

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 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 was 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, $ 32.4 million was allocated to customer relationships, 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.

Acquisition of Intercoastal Trading, Inc.:

On June 3, 2024, we acquired substantially all the assets of Intercoastal Trading, Inc.

and certain related entities ("Intercoastal") for $ 22.0 million under the terms of a purchase agreement with Intercoastal and its shareholders.

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

The $ 22.0 million purchase price was allocated as follows:

$ 10.7 million 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;

$ 7.2 million to goodwill;

$ 2.4 million to property, plant and equipment;

and the remaining amount to net working capital.

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 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 relationships, 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.

Acquisition of Industrial Research Corporation:

In the fourth quarter of fiscal 2024, we acquired substantially all the assets of Industrial Research Corporation ("Industrial Research") for $ 4.6 million under the terms of a purchase agreement with Industrial Research and its shareholders.

Industrial Research distributed water treatment chemicals and equipment to customers primarily in central to northern Louisiana, eastern Texas and southern Arkansas.

The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

Acquisition of The Miami Products & Chemical Company:

In the third quarter of fiscal 2024, 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 was 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.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Sale of bleach packaging assets:

On March 30, 2023, we sold certain assets in our Industrial segment related to our consumer bleach packaging business for $ 7 million.

These assets were not core to our Industrial segment operations, where we tend to focus our manufacturing operations on bulk products.

The assets sold included plant equipment, inventory and intangible assets, all related to the packaging of bleach.

We realized a gain of $ 3 million on this sale, which was recorded within selling, general and administrative expenses.

Acquisition of Water Solutions Unlimited, Inc.:

In the third quarter of fiscal 2024, 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.

Acquisition of EcoTech Enterprises, Inc.:

In the second quarter of fiscal 2024, 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 results of operations since the acquisition date and the assets are included in our Water Treatment segment.

Note 3 — Revenue

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Fiscal Year Ended March 30, 2025:

(In thousands) Industrial Water

Treatment Health and

(In thousands) Water

Treatment Industrial Health and

Nutrition Total

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Total external customer sales $ 446,489 $ 382,487 $ 145,455 $ 974,431

Fiscal Year Ended April 2, 2023:

(In thousands) Industrial Water

Treatment Health and

Fiscal Year Ended March 31, 2024:

(In thousands) Water

Treatment Industrial Health and

Nutrition Total

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Fiscal Year Ended April 2, 2023:

(In thousands) Industrial Water

Treatment Health and

(In thousands) Water

Treatment Industrial Health and

Nutrition Total

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Total external customer sales $ 304,925 $ 470,760 $ 159,413 $ 935,098

(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.

(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.

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.

(3) This line includes bulk products in our Water Treatment and Industrial 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.

HAWKINS, INC.

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For so long as the hedge is effective, changes in fair value of the cash flow hedge are recorded in other comprehensive income or loss (net of tax) until income or loss from the cash flows of the hedged item is realized.

For fiscal 2024, 2023 and 2022, we recorded $ 0.2 million, $ 1.6 million, and $ 1.3 million, respectively, in other comprehensive income related to unrealized gains (net of tax) on the cash flow hedge.

Included in other long-term assets on our consolidated balance sheet was $ 4.3 million as of March 31, 2024 and $ 4.0 million as of April 2, 2023.

For fiscal 2025, we recorded $ 1.4 million in other comprehensive income related to unrealized losses (net of tax) on the cash flow hedge.

For fiscal 2024 and 2023, we recorded $ 0.2 million and $ 1.6 million, respectively, in other comprehensive income related to unrealized gains (net of tax) on the cash flow hedge.

Included in other long-term assets on our consolidated balance sheet was $ 2.4 million as of March 30, 2025 and $ 4.3 million as of March 31, 2024.

By their nature, derivative instruments are subject to market risk.

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Our financial assets and liabilities are measured at fair value as 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).

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.

The carrying values 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the balances of assets measured at fair value on a recurring basis as of March 31, 2024 and April 2, 2023.

(In thousands) March 31, 2024 April 2, 2023

The following table summarizes the balances of assets measured at fair value on a recurring basis as of March 30, 2025 and March 31, 2024.

(In thousands) 2025 2024

Deferred compensation plan assets Level 1 $ 11,723 $ 10,042

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(In thousands)

Earnout liability at April 2, 2023

Addition for acquisition 10,664

Earnout liability at March 31, 2024

Fair value adjustments 1,369

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Note 6 — Inventories

Inventories at March 31, 2024 and April 2, 2023 consisted of the following:

Inventories at March 30, 2025 and March 31, 2024 consisted of the following:

(In thousands)

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Net inventory $ 83,512 $ 74,600

The FIFO value of inventories accounted for under the LIFO method was $ 76.2 million at March 31, 2024 and $ 101.4 million at April 2, 2023.

The FIFO value of inventories accounted for under the LIFO method was $ 75.9 million at March 30, 2025 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 Other Identifiable Intangible Assets

The carrying amount of goodwill for each of our three reportable segments were as follows:

(In thousands) Industrial Water Treatment Health and Nutrition Total

Balance as of April 3, 2022 and April 2, 2023

The carrying amounts of goodwill for each of our three reportable segments were as follows:

(In thousands) Water Treatment Industrial Health and Nutrition Total

Balance as of April 2, 2023

$ 25,961 $ 6,495 $ 44,945 $ 77,401

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$ 51,959 $ 6,495 $ 44,945 $ 103,399

Addition due to acquisitions 32,010 — — 32,010

Balance as of March 30, 2025

$ 83,969 $ 6,495 $ 44,945 $ 135,409

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of our identifiable intangible assets as of March 31, 2024 and April 2, 2023:

The following is a summary of our identifiable intangible assets as of March 30, 2025 and March 31, 2024:

Gross Amount Accumulated

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Note 8 – Debt

We have in place a Credit Agreement with U.S.

Bank as Sole Lead Arranger and Sole Book Runner, and other lenders from time to time party thereto, whereby U.S.

Bank is also serving as Administrative Agent.

The Credit Agreement provides us with a “Revolving Loan Facility” totaling $ 250 million.

The Revolving Loan Facility includes a $ 10 million letter of credit subfacility and $ 25 million swingline subfacility.

The Revolving Loan Facility has a five-year maturity date, maturing on April 30, 2027.

The Revolving Loan Facility is secured by substantially all of our personal property assets and those of our subsidiaries.

As of March 30, 2025, we had in place a second amended and restated credit agreement, as amended (the "Existing Credit Agreement") with U.S.

Bank National Association and other lenders which provided us with secured revolving credit facilities (the "Existing Revolving Loan Facility”) totaling $ 250 million.

The Existing Revolving Loan Facility included a $ 10 million letter of credit subfacility and a $ 25 million swingline subfacility.

The Existing Revolving Loan Facility was scheduled to mature on April 30, 2027.

The Existing Revolving Loan Facility was secured by substantially all of our personal property assets and those of our subsidiaries.

At March 30, 2025, the effective interest rate on our borrowings was 4.3 %.

In addition to paying interest on the outstanding principal under the Revolving Loan Facility, we are required to pay a commitment fee on the unutilized commitments thereunder.

The commitment fee is between 0.15 % and 0.25 %, depending on our leverage ratio.

Unamortized debt issuance costs of $ 0.3 million paid in connection with the previous credit facility, are reflected as a reduction of debt and are being amortized as interest expense over the term of the Revolving Loan Facility.

In addition to paying interest on the outstanding principal under the Revolving Loan Facility, we were required to pay a commitment fee on the unutilized commitments thereunder.

The commitment fee was between 0.15 % and 0.25 %, depending on our leverage ratio.

Unamortized debt issuance costs of $ 0.3 million paid in connection with the Existing Credit Facility are reflected as a reduction of debt and are amortized as interest expense over the term of the Existing Revolving Loan Facility.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Credit Agreement requires us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to 1.0 .

The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict our ability to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions, grant liens on our assets or enter into rate management transactions, subject to certain limitations.

We are permitted to make distributions, pay dividends and repurchase shares so long as no default or event of default exists or would exist as a result thereof.

The Existing Credit Agreement required us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to 1.0 .

The Credit Agreement also contained other customary affirmative and negative covenants, including covenants that restricted our ability to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions, grant liens on our assets or enter into rate management transactions, subject to certain limitations.

We were permitted to make distributions, pay dividends and repurchase shares so long as no default or event of default existed or would exist as a result thereof.

As of March 30, 2025, we were in compliance with all required covenants.

Debt at March 31, 2024 and April 2, 2023 consisted of the following:

(In thousands) March 31, 2024 April 2, 2023

Debt at March 30, 2025 and March 31, 2024 consisted of the following:

(In thousands) 2025 2024

Senior secured revolving loan $ 149,000 $ 99,000

3 unchanged sentences

Total long-term debt $ 138,906 $ 88,818

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Existing Credit Agreement was further amended after the end of the fiscal year.

See Note 16 to our consolidated financial statements for further information.

Note 9 — Share-Based Compensation

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Vested ( 105,600 ) 31.74

Forfeited ( 10,884 ) 34.68

Outstanding at end of fiscal 2024

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The total fair value of performance-based restricted stock units vested was $ 3.2 million in fiscal 2025, $ 3.4 million in fiscal 2024 and $ 1.9 million in fiscal 2023.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Until the performance-based restricted stock units result in the issuance of restricted stock, the amount of expense recorded each period is dependent upon our estimate of the number of shares that will ultimately be issued and our then-current common share price.

1 unchanged sentence

Unrecognized compensation expense related to non-vested restricted stock and non-vested restricted share units as of March 30, 2025 was $ 6.4 million and is expected to be recognized over a weighted average period of 1.3 years.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted Stock Awards.

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We repurchased 181,657 common shares at an aggregate purchase price of $ 6.6 million during fiscal 2023.

As of March 31, 2024, the number of shares available to be purchased under the share repurchase program was 937,487 .

As of March 30, 2025, 731,544 shares remained available to be purchased under the share repurchase program.

Note 11 — Retirement Plans

6 unchanged sentences

In addition to the employer contributions described above, both the profit-sharing plan and the retirement plan include a 401(k) plan that allows employees to contribute pre-tax earnings up to the maximum amount allowed under the IRC, with an employer match of up to 5 % of the employee’s eligible compensation.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We have two employee stock ownership plans (“ESOPs”), one covering the majority of our non-bargaining unit employees and the other covering our collective bargaining unit employees.

1 unchanged sentence

Contributions to both plans are subject to a maximum amount allowed under the IRC, and were 2.5 % or 5.0 % of each employee’s eligible wages, depending on each eligible employee’s hire date, for fiscal 2025, 2024 and 2023.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We have a nonqualified deferred compensation plan covering employees who are classified as “highly compensated employees” as determined by IRS guidelines for the plan year and who were hired on or before April 1, 2012.

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In the fourth quarter of fiscal 2024, we recorded a liability of $ 7.7 million related to estimated remediation expenses associated with perchlorinated biphenyls ("PCBs") discovered in the soil at our Rosemount, MN facility during our expansion project.

This expense was recorded as an operating expense within cost of goods sold in our Consolidated Statements of Income.

This expense was recorded as an operating expense within cost of sales in our Consolidated Statements of Income.

We acquired the property, which had prior heavy industrial use, in fiscal 2012.

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Given the many uncertainties involved in assessing environmental claims, our reserves may prove to be insufficient.

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.

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

Asset Retirement Obligations.

We have three leases of land which contain terms that state that at the end of the lease term, we have a specified amount of time to remove the property and buildings.

We have three leases of land that contain terms that state that at the end of the lease term, we have a specified amount of time to remove the property and buildings.

Including available lease extensions, these leases expire in 2029, 2033 and 2044.

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Total 26.3 % 25.5 % 27.3 %

The tax effects of items comprising our net deferred tax liability as of March 31, 2024 and April 2, 2023 are as follows:

The tax effects of items comprising our net deferred tax liability as of March 30, 2025 and March 31, 2024 are as follows:

(In thousands) 2025 2024

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

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.

The tax years prior to our fiscal year ended April 3, 2022 are closed to examination by the Internal Revenue Service, and with few exceptions, state and local income tax jurisdictions.

HAWKINS, INC.

4 unchanged sentences

Our leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the lease for up to 10 years .

As of March 31, 2024 and April 2, 2023, our operating lease components with initial or remaining terms in excess of one year were classified on the consolidated balance sheet within right-of-use assets, short-term lease liability and long-term lease liability.

Total lease expense was $ 4.0 million for the twelve months ended March 31, 2024 and $ 3.1 million for the twelve months ended April 2, 2023, and includes leases less than 12 months in duration.

As of March 30, 2025 and March 31, 2024, our operating lease components with initial or remaining terms in excess of one year were classified on the consolidated balance sheet within right-of-use assets, short-term lease liability and long-term lease liability.

Total lease expense was $ 4.6 million for the twelve months ended March 30, 2025 and $ 4.0 million for the twelve months ended March 31, 2024, and includes leases less than 12 months in duration.

Other information related to our operating leases was as follows:

March 30, 2025

April 2, 2023

March 31, 2024

Lease Term and Discount Rate

12 unchanged sentences

Present value of lease liabilities $ 13,820

Note 15 — Segment Information

We organize and manage our business by the following three segments, which meet the definition of reportable segments under ASC 280-10, Segment Reporting:

Water Treatment, Industrial and Health and Nutrition.

These segments are defined primarily by product and type of customer.

Our chief operating decision-maker (CODM), who is our President and Chief Executive Officer, regularly reviews the consolidated financial statements in their entirety and financial information at the reportable segment level.

The CODM uses operating income and considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses segment operating income for evaluating pricing strategy, to assess the performance of each segment by comparing the results of each segment with one another, and in determining the compensation of certain employees.

The CODM has ultimate responsibility for enterprise decisions and making resource allocation decisions for the company and the segments.

• Our Water Treatment segment specializes in providing chemicals, products, equipment, services and solutions for potable water, municipal and industrial wastewater, industrial process water, non-residential swimming pool water and agricultural water.

This segment has the resources and flexibility to treat systems ranging in size from a single small well to a multi-million-gallon-per-day facility.

• Our Industrial segment specializes in providing industrial chemicals, products and services to industries such as agriculture, chemical processing, electronics, energy, food, pharmaceutical and plating.

This segment's principal products are acids, alkalis and food-grade and pharmaceutical salts and ingredients.

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 15 — Segment Information

We have three reportable segments:

Industrial, Water Treatment and Health and Nutrition.

• Our Health and Nutrition segment specializes in providing ingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food and beverage, personal care, dietary supplement and other nutritional food, health and wellness products.

This segment offers a diverse product portfolio including minerals, vitamins and amino acids, excipients, joint products, botanicals and herbs, sweeteners and enzymes.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Product costs and expenses for each segment are based on actual costs incurred along with cost allocations of shared and centralized functions.

We evaluate performance based on operating income.

Reportable segments are defined primarily by product and type of customer.

Segments are responsible for the sales, marketing and development of their products and services.

1 unchanged sentence

There are no intersegment sales, and no operating segments have been aggregated.

Reportable Segments Industrial Water

Treatment Health and Nutrition Total

In fiscal 2025, 2024 and 2023, none of our customers accounted for 10% or more of our total sales.

Summarized financial information for the Company’s reportable segments is presented and reconciled to consolidated financial information in the following tables:

Reportable Segments Water

Treatment Industrial Health and Nutrition Total

(In thousands)

1 unchanged sentence

Sales $ 446,489 $ 382,487 $ 145,455 $ 974,431

Cost of sales - materials 259,721 285,295 106,524 651,540

Cost of sales - operational overhead 65,159 24,591 7,603 97,353

Gross profit 121,609 72,601 31,328 225,538

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Capital expenditures $ 20,166 $ 20,530 $ 400 $ 41,096

Fiscal Year Ended April 2, 2023:

Depreciation and amortization $ 18,893 $ 15,814 $ 5,241 $ 39,948

Fiscal Year Ended March 31, 2024:

Sales $ 363,289 $ 409,465 $ 146,408 $ 919,162

Cost of sales - materials 214,020 310,074 111,460 635,554

Cost of sales - operational overhead 50,771 31,846 7,355 89,972

Gross profit 98,498 67,545 27,593 193,636

3 unchanged sentences

Capital expenditures $ 15,739 $ 24,280 $ 132 $ 40,151

Depreciation and amortization $ 12,360 $ 14,155 $ 5,288 $ 31,803

Fiscal Year Ended April 2, 2023:

Sales $ 304,925 $ 470,760 $ 159,413 $ 935,098

Cost of sales - materials 197,010 383,670 120,827 701,507

Cost of sales - operational overhead 40,707 18,975 8,790 68,472

Gross profit 67,208 68,115 29,796 165,119

3 unchanged sentences

Capital expenditures $ 16,311 $ 31,635 $ 375 $ 48,321

* Unallocated assets not included, consisting primarily of cash and cash equivalents, prepaid expenses, and non-qualified deferred compensation plan assets of $ 28.2 million at March 31, 2024, $ 26.0 million at April 2, 2023 and $ 19.5 million at April 3, 2022

Depreciation and amortization $ 9,261 $ 12,881 $ 5,298 $ 27,440

* Unallocated assets not included, consisting primarily of cash and cash equivalents, prepaid expenses, and non-qualified deferred compensation plan assets of $ 27.4 million at March 30, 2025, $ 28.2 million at March 31, 2024 and $ 26.0 million at April 2, 2023

HAWKINS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 16 — Subsequent Events

On April 25, 2025, we entered into a second amendment that further amended the Existing Credit Agreement (as amended, the “Credit Agreement”).

The second amendment increased the revolving commitment under the Existing Credit Agreement to provide us with senior secured revolving credit facilities (the “Revolving Loan Facility”) totaling $ 400.0 million.

The Revolving Loan Facility includes a $ 10.0 million letter of credit subfacility and $ 25.0 million swingline subfacility.

Bank, JP Morgan Chase Bank, N.A., Wells Fargo Bank, N.A., and Associated Bank, N.A.

were lenders under the Credit Agreement as of the date of the second amendment.

We drew approximately $ 150 million of the proceeds from the Revolving Loan Facility to acquire substantially all of the assets of WaterSurplus.

We may use other proceeds from the Revolving Loan Facility for working capital, capital expenditures, restricted payments and other acquisitions permitted under the Credit Agreement, and other general corporate purposes.

We paid fees of approximately $ 1.0 million associated with this refinancing.

The Revolving Loan Facility is scheduled to mature on April 25, 2030.

Also on April 25, 2025, we acquired substantially all of the assets of WaterSurplus for approximately $ 150 million and may be obligated to pay up to an additional $ 53.7 million based on achieving certain earnings targets five years after the closing of the acquisition.

WaterSurplus delivers sustainable water treatment solutions throughout the United States focused on membrane separation systems, engineering and design services, media filtration systems, new equipment and rental unit manufacturing and sales, along with rapid-response PFAS removal solutions for “forever chemicals”.

WaterSurplus serves municipal water customers as well as customers in the food and beverage industry, offering patented products within its filtration business that reduce the frequency of membrane cleaning, resulting in lower energy costs, downtime, and lower overall operational costs.

In April 2025, we realigned our reporting segments to reflect organizational changes made and to reflect the way we manage our operations and allocate resources.

In fiscal 2026, we will have the following reporting segments:

Water Treatment, Health and Food Sciences, and Industrial Solutions.

We believe this realignment better reflects the value our company provides to our customers and our evolution from a bulk commodity distributor into a specialty ingredients company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data