HAWKINS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS HAWKINS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) September 28, 2025 March 30, 2025 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,415 $ 5,103 Trade accounts receivables, net 131,090 131,795 Inventories 92,905 83,512 Income taxes receivable — 2,864 Prepaid expenses and other current assets 5,148 7,417 Total current assets 239,558 230,691 PROPERTY, PLANT, AND EQUIPMENT: 455,889 420,953 Less accumulated depreciation 208,446 195,667 Net property, plant, and equipment 247,443 225,286 OTHER ASSETS: Right-of-use assets 17,404 13,449 Goodwill 222,145 135,409 Intangible assets, net of accumulated amortization 241,077 150,121 Deferred compensation plan asset 13,950 11,185 Other 2,587 3,726 Total other assets 497,163 313,890 Total assets $ 984,164 $ 769,867 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable — trade $ 55,270 $ 61,195 Accrued payroll and employee benefits 14,726 19,659 Income tax payable 1,218 — Current portion of long-term debt 9,812 9,913 Environmental remediation 7,700 7,700 Other current liabilities 9,834 8,668 Total current liabilities 98,560 107,135 LONG-TERM LIABILITIES: Long-term debt, less current portion 268,328 138,906 Long-term lease liability 15,114 10,920 Pension withdrawal liability 2,960 3,155 Deferred income taxes 22,155 22,356 Deferred compensation liability 15,233 13,132 Earnout liabilities 54,556 12,604 Other long-term liabilities 290 1,367 Total long-term liabilities 378,636 202,440 Total liabilities 477,196 309,575 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock; authorized: 60,000,000 shares of $ 0.01 par value; 20,740,284 and 20,684,621 shares issued and outstanding as of September 28, 2025 and March 30, 2025, respectively 207 207 Additional paid-in capital 27,261 24,094 Retained earnings 478,309 434,259 Accumulated other comprehensive income 1,191 1,732 Total shareholders’ equity 506,968 460,292 Total liabilities and shareholders’ equity $ 984,164 $ 769,867 See accompanying notes to condensed consolidated financial statements. 1 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except share and per-share data) Three Months Ended Six Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Sales $ 280,434 $ 247,029 $ 573,706 $ 502,908 Cost of sales ( 212,791 ) ( 186,807 ) ( 433,701 ) ( 378,031 ) Gross profit 67,643 60,222 140,005 124,877 Selling, general and administrative expenses ( 33,703 ) ( 26,477 ) ( 64,732 ) ( 51,341 ) Operating income 33,940 33,745 75,273 73,536 Interest expense, net ( 3,832 ) ( 1,427 ) ( 7,101 ) ( 2,690 ) Other income 721 673 1,663 832 Income before income taxes 30,829 32,991 69,835 71,678 Income tax expense ( 8,231 ) ( 8,873 ) ( 18,062 ) ( 18,681 ) Net income $ 22,598 $ 24,118 $ 51,773 $ 52,997 Weighted average number of shares outstanding - basic 20,737,743 20,757,397 20,727,614 20,786,938 Weighted average number of shares outstanding - diluted 20,845,744 20,860,418 20,837,595 20,898,641 Basic earnings per share $ 1.09 $ 1.16 $ 2.50 $ 2.55 Diluted earnings per share $ 1.08 $ 1.16 $ 2.48 $ 2.54 Cash dividends declared per common share $ 0.19 $ 0.18 $ 0.37 $ 0.34 See accompanying notes to condensed consolidated financial statements. 2 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands) Three Months Ended Six Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Net income $ 22,598 $ 24,118 $ 51,773 $ 52,997 Other comprehensive income, net of tax: Unrealized loss on interest rate swap ( 217 ) ( 1,330 ) ( 541 ) ( 1,436 ) Total comprehensive income $ 22,381 $ 22,788 $ 51,232 $ 51,561 See accompanying notes to condensed consolidated financial statements. 3 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity Shares Amount BALANCE — March 30, 2025 20,684,621 $ 207 $ 24,094 $ 434,259 $ 1,732 $ 460,292 Cash dividends declared and paid ($ 0.18 per share) — — — ( 3,754 ) — ( 3,754 ) Share-based compensation expense — — 2,212 — — 2,212 Vesting of restricted stock 61,819 — ( 1 ) — — ( 1 ) Shares surrendered for payroll taxes ( 28,590 ) — ( 3,028 ) — — ( 3,028 ) Other comprehensive income, net of tax — — — — ( 324 ) ( 324 ) Net income — — — 29,175 29,175 BALANCE — June 29, 2025 20,717,850 $ 207 $ 23,277 $ 459,680 $ 1,408 $ 484,572 Cash dividends declared and paid ($ 0.19 per share) — — — ( 3,969 ) — ( 3,969 ) Share-based compensation expense — — 2,375 — — 2,375 Vesting of restricted stock 6,734 — — — — — ESPP shares issued 15,700 — 1,609 — — 1,609 Other comprehensive income, net of tax — — — — ( 217 ) ( 217 ) Net income — — — 22,598 — 22,598 BALANCE — September 28, 2025 20,740,284 $ 207 $ 27,261 $ 478,309 $ 1,191 $ 506,968 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity Shares Amount BALANCE — March 31, 2024 20,790,261 $ 208 $ 38,154 $ 364,549 $ 3,115 $ 406,026 Cash dividends declared and paid ($ 0.16 per share) — — — ( 3,358 ) — ( 3,358 ) Share-based compensation expense — — 1,467 — — 1,467 Vesting of restricted stock 83,658 1 ( 1 ) — — — Shares surrendered for payroll taxes ( 34,047 ) ( 1 ) ( 2,540 ) — — ( 2,541 ) Shares repurchased ( 105,541 ) ( 1 ) ( 9,148 ) — — ( 9,149 ) Other comprehensive income, net of tax — — — — ( 106 ) ( 106 ) Net income — — — 28,879 — 28,879 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 See accompanying notes to condensed consolidated financial statements. 4 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six Months Ended September 28, 2025 September 29, 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 51,773 $ 52,997 Reconciliation to cash flows: Depreciation and amortization 25,553 19,256 Change in fair value of earnout liabilities ( 1,048 ) 684 Operating leases 1,881 1,607 Gain on deferred compensation assets ( 1,664 ) ( 833 ) Stock compensation expense 4,587 3,299 Other 8 ( 32 ) Changes in operating accounts providing (using) cash: Trade receivables 5,140 616 Inventories ( 5,196 ) ( 6,403 ) Accounts payable ( 11,013 ) ( 4,218 ) Accrued liabilities ( 4,209 ) ( 7,285 ) Lease liabilities ( 1,897 ) ( 1,624 ) Income taxes 4,082 341 Other 3,034 811 Net cash provided by operating activities 71,031 59,216 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant, and equipment ( 24,342 ) ( 21,286 ) Acquisitions ( 162,508 ) ( 25,400 ) Other 1,037 357 Net cash used in investing activities ( 185,813 ) ( 46,329 ) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends declared and paid ( 7,723 ) ( 7,121 ) New shares issued 1,609 1,297 Payroll taxes paid in exchange for shares withheld ( 3,028 ) ( 2,541 ) Shares repurchased — ( 9,149 ) Payments on revolving loan ( 40,000 ) ( 40,000 ) Payments for debt issuance costs ( 764 ) — Proceeds from revolving loan borrowings 170,000 45,000 Net cash provided by (used in) financing activities 120,094 ( 12,514 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 5,312 373 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,103 7,153 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,415 $ 7,526 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for income taxes $ 13,980 $ 18,340 Cash paid for interest $ 7,182 $ 2,923 Noncash investing activities - capital expenditures in accounts payable $ 1,568 $ 1,094 See accompanying notes to condensed consolidated financial statements. 5 HAWKINS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1 – Summary of Significant Accounting Policies Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025 , previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. All adjustments made to the interim condensed consolidated financial statements were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the six months ended September 28, 2025 are not necessarily indicative of the results that may be expected for the full year. As used in this Form 10-Q, except where otherwise stated or indicated by the context, "Hawkins," "we," "us," the Company," or "our" means Hawkins, Inc. and its subsidiaries. References to "fiscal 2024" refer to the fiscal year ended March 31, 2024, references to "fiscal 2025" refer to the fiscal year ended March 30, 2025, and references to "fiscal 2026" refer to the fiscal year ending March 29, 2026. Effective beginning with the first quarter of fiscal 2026, we realigned our reporting segments to reflect organizational changes made and to reflect the way we manage our operations and allocate resources. 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. We now organize and manage our business by the following three segments, each of which meets the definition of reportable segments under ASC 280-10, Segment Reporting : Water Treatment, Food & Health Sciences, and Industrial Solutions. These segments are defined primarily by product and type of customer. Information presented in this quarterly report has been recast to align with the new segments. Additional information regarding these new segments is set forth in Note 13 - Segment Information. Use of Estimates. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, right-of-use assets, goodwill, intangibles, accrued expenses, short-term and long-term lease liability, income taxes and related accounts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounting Policies. The accounting policies we follow are set forth in Note 1 – Nature of Business and Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2025 , previously filed with the SEC. There have been no significant change in our accounting policies since the end of fiscal 2025. Recently Issued Accounting Pronouncements Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU No.2023-09) In December 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update No. 2023-09 to enhance the transparency and decision-usefulness of income tax disclosures and to provide information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. The adoption of ASU No. 2023-09 is not expected to have a material impact on our consolidated financial statements but will require a lower level of disclosure in our Form 10-K for the year ending March 29, 2026 and in periodic reports thereafter. Disaggregation of Income Statement Expenses (ASU No.2024-03) In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires public entities to disclose, within the footnotes to the financial statements, disaggregated information about certain income statement expense captions, including disclosure of amounts for purchases of inventory, employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, on a prospective basis, with early adoption and retrospective application permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statement disclosures. 6 "One Big Beautiful Bill Act" On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act included changes to U.S. tax law that were effective for us beginning with our quarter ending September 28, 2026. These changes included provisions allowing retroactive accelerated tax deductions for qualified property that resulted in an insignificant tax benefit for fiscal 2025 and are expected to have a similar impact in fiscal 2026. Note 2 — Acquisitions General We generally pursue business combinations to strengthen our position in existing markets, increase our market share and product offerings and expand into new markets. Acquisitions are accounted for under the acquisition method of accounting. For each acquisition, the excess of the purchase consideration over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill, which generally represents the combined value of our existing resources with the organizational talent of the acquired companies’ respective management teams to maximize efficiencies, market share growth and overall financial performance. For each acquisition, we complete our allocation of purchase price to the fair values of acquired assets and liabilities within a one-year measurement period. For each acquisition completed in fiscal 2025 and fiscal 2026, the results of operations since the acquisition date and the assets are included in our Water Treatment segment, with the exception of one immaterial acquisition in the second quarter of fiscal 2026 that was in our Food & Health Sciences segment. Costs associated with each acquisition were not material and were expensed as incurred. Fiscal 2026 Acquisitions Acquisition of WaterSurplus, Inc.: On April 25, 2025, we acquired substantially all of the assets and assumed certain liabilities of Surplus Management, Inc. d/b/a WaterSurplus (“WaterSurplus”) for an initial purchase price of approximately $ 149.9 million under the terms of an asset purchase agreement by and among WaterSurplus and related entities and their shareholders, Panther Acquisition Corporation, and Hawkins, Inc., as well as a related real estate purchase agreement. In addition, we may be obligated to pay an additional earnout amount based on a target of accumulated gross profit for the first five years after the acquisition. The maximum earnout liability of $ 53.7 million was discounted and recorded at the estimated present value of $ 43.0 million. WaterSurplus is based in Rockford, IL and delivers sustainable water treatment solutions to customers throughout the United States. The total purchase price, including the estimated $ 43.0 million earnout liability, was preliminarily allocated as follows: $ 75.0 million to customer relationships, to be amortized over 15 years; $ 6.2 million to trade names, to be amortized over 15 years; $ 13.0 million to technology, to be amortized over 8 years; $ 82.6 million to goodwill; $ 13.2 million to property, plant and equipment; and the remaining amount of $ 2.9 million to net working capital. During the three months ended September 28, 2025, a measurement period adjustment was finalized related to the acquisition of WaterSurplus. The initial accounting was provisional, and the final fair value of identified contract assets was higher than initially estimated. The total adjustment increased the carrying amount of contract assets by $ 1.4 million and decreased the carrying amount of goodwill by $ 1.4 million. The measurement period adjustment had no impact on the condensed consolidated statements of income for the three months ended September 28, 2025. The goodwill recognized as a result of this acquisition 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. 7 The following pro forma information has been prepared as if the WaterSurplus acquisition and the borrowing that financed the acquisition had occurred as of the beginning of the earliest fiscal period presented. The unaudited pro forma information is not necessarily indicative of what our consolidated results of operations actually would have been had the acquisition occurred at the beginning of each fiscal year, nor is it indicative of our future operational results. Three Months Ended Six Months Ended (in thousands, except per share data) September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Pro forma sales $ 280,434 $ 254,948 $ 575,861 $ 518,621 Pro forma net income $ 22,598 $ 21,593 $ 51,764 $ 48,161 Pro forma basic earnings per share $ 1.09 $ 1.04 $ 2.50 $ 2.32 Pro forma diluted earnings per share $ 1.08 $ 1.04 $ 2.48 $ 2.31 The unaudited pro forma financial information above is adjusted to reflect the following: (a) interest expense, including amortization of debt issuance costs, related to the approximately $ 150 million of debt used to fund the acquisition and related purchase of real estate; (b) amortization expense related to the preliminary $ 94 million of identifiable intangible assets recognized in conjunction with the acquisition; (c) depreciation expense as adjusted for adjusted fixed asset values; (d) remeasurement of the earnout payable at fair value; (e) adjustment to cost of goods sold for the inventory step-up adjustment; (f) adjustment for acquisition costs incurred; (g) elimination of net interest previously reflected on WaterSurplus’ financial statements; and (h) recording income taxes at our effective tax rate for each period. Sales of WaterSurplus of $ 5.7 million for the three months ended September 28, 2025 and $ 17.9 million for the six months ended September 28, 2025 were included in our condensed consolidated statements of income. Operating loss of WaterSurplus of $ 2.3 million for the three months ended September 28, 2025 and $ 0.2 million for the six months ended September 28, 2025 was also included in our condensed consolidated statements of income. Inclusive of four additional immaterial acquisitions not discussed above, total cash consideration for the acquisitions completed in the six months ended September 28, 2025 was $ 162.5 million. Fiscal 2025 Acquisitions We completed four acquisitions in fiscal 2025, including the previously announced acquisitions shown below. Amerochem Corporation was acquired on January 31, 2025 for $ 44.0 million. Located in North Carolina, Amerochem distributed water treatment chemicals and equipment to its customers located primarily in North Carolina. Waterguard, Inc. was acquired on October 31, 2024 for $ 18.0 million. Located in North Carolina, Waterguard distributed water treatment chemicals and equipment to its customers located primarily in North Carolina. Intercoastal Trading, Inc. was acquired on June 3, 2024 for $ 22.0 million. Located in Maryland, Intercoastal Trading distributed water treatment chemicals and equipment to its customers in Maryland, Delaware, and Virginia. Inclusive of one immaterial acquisition not discussed above, total cash consideration for the 2025 acquisitions completed in the six months ended September 29, 2024 was $ 25.4 million. Note 3 - Revenue Our revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. We disaggregate revenues from contracts with customers by operating segments as well as types of products sold. Reporting by operating segment is pertinent to understanding our revenues, as it aligns to how we review the financial performance of our operations. The following tables disaggregate external customer net sales by major revenue stream as reviewed internally for the three and six months ended September 28, 2025 and September 29, 2024: 8 Three months ended September 28, 2025 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended, repackaged products or equipment (1) $ 137,516 $ — $ 43,467 $ 180,983 Bulk products (2) 12,283 — 11,745 24,028 Nutrition — 33,412 — 33,412 Food — 24,548 — 24,548 Pharmaceutical — 6,670 — 6,670 Agricultural — 7,662 — 7,662 Other 1,109 622 1,400 3,131 Total external customer sales $ 150,908 $ 72,914 $ 56,612 $ 280,434 Three months ended September 29, 2024 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended, repackaged products or equipment (1) $ 113,529 $ — $ 38,766 $ 152,295 Bulk products (2) 9,753 — 11,100 20,853 Nutrition — 32,447 — 32,447 Food — 25,902 — 25,902 Pharmaceutical — 6,095 — 6,095 Agricultural — 6,306 — 6,306 Other 1,246 652 1,233 3,131 Total external customer sales $ 124,528 $ 71,402 $ 51,099 $ 247,029 Six months ended September 28, 2025 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended or repackaged products (1) $ 273,863 $ — $ 84,785 $ 358,648 Bulk products (2) 24,251 — 23,589 47,840 Nutrition — 68,748 — 68,748 Food — 50,625 — 50,625 Pharmaceutical — 12,227 — 12,227 Agricultural — 29,132 — 29,132 Other 2,360 1,359 2,767 6,486 Total external customer sales $ 300,474 $ 162,091 $ 111,141 $ 573,706 Six months ended September 29, 2024 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended or repackaged products (1) $ 218,535 $ — $ 79,114 $ 297,649 Bulk products (2) 20,672 — 22,774 43,446 Nutrition — 67,772 — 67,772 Food — 52,418 — 52,418 Pharmaceutical — 11,768 — 11,768 Agricultural — 23,299 — 23,299 Other 2,497 1,238 2,821 6,556 Total external customer sales $ 241,704 $ 156,495 $ 104,709 $ 502,908 (1) This line includes our non-bulk specialty products in our Water Treatment and Industrial Solutions segments that we either manufacture, blend, repackage, resell in their original form, or direct ship to our customers in smaller quantities, and equipment and services we provide for our customers. (2) This line includes bulk products in our Water Treatment and Industrial Solutions 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. 9 Note 4 – Earnings per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted EPS includes the dilutive impact of incremental shares assumed to be issued as performance units and restricted stock. Basic and diluted EPS were calculated using the following: Three Months Ended Six Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Weighted-average common shares outstanding—basic 20,737,743 20,757,397 20,727,614 20,786,938 Dilutive impact of performance units and restricted stock 108,001 103,021 109,981 111,703 Weighted-average common shares outstanding—diluted 20,845,744 20,860,418 20,837,595 20,898,641 For each of the periods presented, there were no shares excluded from the calculation of weighted-average common shares for diluted EPS. Note 5 – Fair Value Measurements Our financial assets and liabilities are measured at fair value at 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. Because of the variable-rate nature of our debt under our credit facility, our debt also approximates fair value. Assets and Liabilities Measured at Fair Value on a Recurring Basis. The fair value hierarchy requires the use of observable market data when available. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. Our financial assets that are measured at fair value on a recurring basis are an interest rate swap and assets held in a deferred compensation retirement plan. Both of these assets are classified as long-term assets on our balance sheet, with the portion of the deferred compensation retirement plan assets expected to be paid within twelve months classified as current assets. The fair value of the interest rate swap is determined by the respective counterparties based on interest rate changes. Interest rate swaps are valued based on observable interest rate yield curves for similar instruments. The deferred compensation plan assets relate to contributions made to a non-qualified compensation plan on behalf of certain employees who are classified as “highly compensated employees” as determined by IRS guidelines. The assets are part of a rabbi trust and the funds are held in mutual funds. 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 earnout liabilities recorded in conjunction with the acquisitions of Water Solutions Unlimited, Inc. ("Water Solutions") (acquired during fiscal 2024) and WaterSurplus are based upon achieving certain targets. The Water Solutions earnout is based on a target of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in year three of the acquisition. The earnout liability was valued based upon a risk-neutral pricing analysis within a Monte Carlo simulation framework, which is a Level 3 input. The WaterSurplus earnout liability is based on a target of accumulated gross profit for the first five years of the acquisition. The earnout liability was discounted and recorded at the present value of the anticipated, maximum payout amount, which is a Level 3 input. The earnout liabilities are adjusted to fair value at each reporting date until settled. Changes in fair value are included in selling, general and administrative expenses in our Condensed Consolidated Statements of Income. The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of September 28, 2025 and March 30, 2025. 0 (In thousands) September 28, 2025 March 30, 2025 Assets Deferred compensation plan assets Level 1 $ 14,504 $ 11,723 Interest rate swap Level 2 $ 1,631 $ 2,373 Liabilities WaterSurplus earnout liability Level 3 $ 43,892 $ — Water Solutions earnout liability Level 3 $ 10,664 $ 12,604 10 The changes in the earnout liability measured at fair value using Level 3 inputs were as follows: (In thousands) Earnout liability at March 30, 2025 $ 12,604 Addition for acquisition of WaterSurplus Level 3 $ 43,000 Fair value adjustments to WaterSurplus earnout liability Level 3 $ 892 Fair value adjustments to Water Solutions earnout liability Level 3 $ ( 1,940 ) Earnout liability at September 28, 2025 $ 54,556 Note 6 – Inventories Inventories at September 28, 2025 and March 30, 2025 consisted of the following: September 28, 2025 March 30, 2025 (In thousands) Inventory (FIFO basis) $ 116,683 $ 106,357 LIFO reserve ( 23,778 ) ( 22,845 ) Net inventory $ 92,905 $ 83,512 We use the last in, first out (“LIFO”) method of valuing the majority of our inventory, which causes the most recent product costs to be recognized in our condensed consolidated statements of income. Note 7 – Goodwill and Intangible Assets The carrying amounts of goodwill for each of our three reportable segments were as follows: (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Balance as of March 30, 2025 $ 83,968 $ 46,149 $ 5,292 $ 135,409 Addition due to acquisitions 86,014 722 — 86,736 Balance as of September 28, 2025 $ 169,982 $ 46,871 $ 5,292 $ 222,145 The following is a summary of our identifiable intangible assets as of September 28, 2025 and March 30, 2025: September 28, 2025 March 30, 2025 (In thousands) Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Finite-life intangible assets Customer relationships $ 279,954 $ ( 65,944 ) $ 214,010 $ 198,364 $ ( 57,311 ) $ 141,053 Trademarks and trade names $ 21,622 $ ( 8,454 ) $ 13,168 $ 14,970 $ ( 7,368 ) $ 7,602 Other finite-life intangible assets 17,472 ( 4,800 ) 12,672 4,410 ( 4,171 ) 239 Total finite-life intangible assets 319,048 ( 79,198 ) 239,850 217,744 ( 68,850 ) 148,894 Indefinite-life intangible assets 1,227 — 1,227 1,227 — 1,227 Total intangible assets $ 320,275 $ ( 79,198 ) $ 241,077 $ 218,971 $ ( 68,850 ) $ 150,121 Note 8 – Debt 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. U.S. 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. 11 We paid fees of approximately $ 1.0 million associated with this refinancing. The Revolving Loan Facility is scheduled to mature on April 25, 2030. Borrowings under the Revolving Loan Facility bear interest at a variable rate based on term SOFR plus a margin. We have an interest rate swap in place to manage the risk associated with a portion of our variable-rate debt. The notional amount of the swap agreement is $ 60 million. At September 28, 2025, the effective interest rate on our borrowings was 5.1 %. Debt at September 28, 2025 and March 30, 2025 consisted of the following: September 28, 2025 March 30, 2025 (In thousands) Senior secured revolving loan $ 279,000 $ 149,000 Less: unamortized debt issuance costs ( 860 ) ( 181 ) Total debt, net of debt issuance costs 278,140 148,819 Less: current portion of long-term debt ( 9,812 ) ( 9,913 ) Total long-term debt $ 268,328 $ 138,906 Note 9 – Income Taxes We are subject to U.S. federal income tax as well as income tax of multiple state 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. Our effective income tax rate was approximately 27% for both the three months ended September 28, 2025 and September 29, 2024, and approximately 26 % for both the six months ended September 28, 2025 and September 29, 2024. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes. Note 10 – Share-Based Compensation Performance-Based Restricted Stock Units . Our Board of Directors (the “Board”) approved a performance-based equity compensation arrangement for our executive officers during the first quarters of each of fiscal 2026 and fiscal 2025. These performance-based arrangements provide for the grant of performance-based restricted stock units under our 2019 Equity Incentive Plan (the "2019 Plan") that represent a possible future issuance of restricted shares of our common stock based on a pre-tax income target for the applicable fiscal year. The actual number of restricted shares to be issued to each executive officer is determined when our final financial information becomes available after the applicable fiscal year and will be between zero shares and 58,353 shares in the aggregate for fiscal 2026. The restricted shares issued, if any, will fully vest approximately two years after the last day of the fiscal year on which the performance is based. 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 September 28, 2025: Shares Weighted- Average Grant Date Fair Value Unvested at beginning of period 137,247 $ 61.49 Granted 61,418 119.67 Vested ( 61,819 ) 43.06 Unvested at end of period 136,846 $ 95.93 We recorded compensation expense related to performance share units and restricted stock of $ 1.9 million for the three months ended September 28, 2025 and $ 1.5 million for the three months ended September 29, 2024. We recorded compensation expense related to performance share units and restricted stock of $ 3.6 million for the six months ended September 28, 2025 and $ 2.6 million for the six months ended September 29, 2024. Substantially all of the compensation expense was recorded in selling, general and administrative expenses in the condensed consolidated statements of income. Restricted Stock Awards . As part of their retainer, our directors, other than the Chief Executive Officer, receive restricted stock for their Board services. The restricted stock awards are under our 2019 Plan and are generally expensed over a one-year vesting period, based on the market value on the date of grant. As of September 28, 2025, there were 4,396 shares of restricted stock with an average grant date fair value of $ 159.16 outstanding under this program. Compensation expense related to restricted stock awards to the Board was $ 0.2 million for both the three months ended September 28, 2025 and September 29, 2024. Compensation expense related to restricted stock awards to the Board was $ 0.3 million for both the six months ended September 28, 2025 and September 29, 2024. 12 During the three months ended September 28, 2025, certain employees from the WaterSurplus acquisition received restricted stock awards under the 2019 Plan, primarily to incentivize their continued service. The restricted stock awards will be expensed over a three-year vesting period, based on the market value on the date of grant. As of September 28, 2025, there were 8,713 shares of restricted stock with an average grant date fair value of $ 142.10 outstanding under this program. Compensation expense related to restricted stock awards to certain WaterSurplus employees was $ 0.1 million for the three and six months ended September 28, 2025 and none for the three and six months ended September 29, 2024. Note 11 – Share Repurchase Program 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 September 28, 2025, no shares were repurchased. 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. As of September 28, 2025, 731,544 shares remained available to be repurchased under the share repurchase program. Note 12 – Commitments and Contingencies Environmental Remediation. 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. We acquired the property, which had prior heavy industrial use, in fiscal 2012. While the source of the PCBs is unknown, we have never brought PCBs onto the property or used PCBs on the site. The liability is not discounted as management expects to incur these expenses within the next twelve months. 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 financial impact related to any such unknown issues. No expenses were charged against this liability during both the three and six months ended September 28, 2025 and September 29, 2024. Note 13 – Segment Information Effective beginning with the first fiscal quarter of fiscal 2026, we realigned our reporting segments to reflect organizational changes made and to reflect the way we manage our operations and allocate resources. 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. In fiscal 2026, we organize and manage our business by the following three segments, each of which meets the definition of reportable segments under ASC 280-10, Segment Reporting : Water Treatment, Food & Health Sciences, and Industrial Solutions. 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 Food & Health Sciences segment specializes in processing and formulation solutions as well as ingredient distribution to manufacturers in the nutrition, food, pharmaceutical, and agricultural markets. This segment offers a diverse product portfolio including base chemistry, acid based reactions, minerals, vitamins and amino acids, excipients, botanicals and herbs, sweeteners and enzymes, fertilizers, and food-grade and pharmaceutical salts and ingredients. • Our Industrial Solutions segment specializes in providing industrial chemicals, products and services to industries such as industrial manufacturing, chemical processing, electronics, energy, plating, and surface finishing. This segment’s principal products are acids and alkalis. 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. There are no intersegment sales and no operating segments have been aggregated. 13 In fiscal 2026 and 2025, none of our customers accounted for 10% or more of our total sales. Summarized financial information for our reportable segments is presented and reconciled to consolidated financial information in the following tables: (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Three months ended September 28, 2025: Sales $ 150,908 $ 72,914 $ 56,612 $ 280,434 Cost of sales - materials 88,814 53,153 45,131 187,098 Cost of sales - operational overhead 18,833 4,280 2,580 25,693 Gross profit 43,261 15,481 8,901 67,643 Selling, general, and administrative expenses 22,071 8,084 3,548 33,703 Operating income 21,190 7,397 5,353 33,940 Interest expense, net ( 3,832 ) Other income 721 Income tax expense ( 8,231 ) Net income 22,598 Identifiable assets* 569,338 247,644 135,082 952,064 Capital expenditures 7,033 1,774 1,991 10,798 Depreciation and amortization 7,854 3,214 2,194 13,262 Three months ended September 29, 2024: Sales $ 124,528 $ 71,402 $ 51,099 $ 247,029 Cost of sales - materials 71,264 51,054 40,305 162,623 Cost of sales - operational overhead 17,336 4,283 2,565 24,184 Gross profit 35,928 16,065 8,229 60,222 Selling, general, and administrative expenses 15,825 7,456 3,196 26,477 Operating income 20,103 8,609 5,033 33,745 Interest expense, net ( 1,427 ) Other income 673 Income tax expense ( 8,873 ) Net income 24,118 Identifiable assets* 292,017 239,639 130,091 661,747 Capital expenditures 5,428 2,421 2,788 10,637 Depreciation and amortization 4,693 3,122 2,112 9,927 14 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Six months ended September 28, 2025: Sales $ 300,474 $ 162,091 $ 111,141 $ 573,706 Cost of sales - materials 177,973 118,967 87,979 384,919 Cost of sales - operational overhead 35,493 8,295 4,994 48,782 Gross profit 87,008 34,829 18,168 140,005 Selling, general, and administrative expenses 41,156 16,465 7,111 64,732 Operating income 45,852 18,364 11,057 75,273 Interest expense, net ( 7,101 ) Other income 1,663 Income tax expense ( 18,062 ) Identifiable assets* Capital expenditures 14,593 4,787 4,962 24,342 Depreciation and amortization 14,758 6,414 4,381 25,553 Six months ended September 29, 2024: Sales $ 241,704 $ 156,495 $ 104,709 $ 502,908 Cost of sales - materials 137,261 112,601 82,246 332,108 Cost of sales - operational overhead 33,307 7,926 4,690 45,923 Gross profit 71,136 35,968 17,773 124,877 Selling, general, and administrative expenses 29,904 14,821 6,616 51,341 Operating income 41,232 21,147 11,157 73,536 Interest expense, net ( 2,690 ) Other income 832 Income tax expense ( 18,681 ) Identifiable assets* Capital expenditures 11,549 4,582 5,155 21,286 Depreciation and amortization 8,864 6,211 4,181 19,256 *Unallocated assets not included, consisting primarily of cash and cash equivalents, prepaid expenses, and non-qualified deferred compensation plan assets of $ 32.1 million at September 28, 2025 and $ 28.0 million at September 29, 2024. 15