HAWKINS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS HAWKINS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) June 28, 2026 March 29, 2026 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,977 $ 3,914 Trade accounts receivables, net 151,773 139,796 Inventories 79,864 78,199 Prepaid expenses and other current assets 9,165 9,556 Total current assets 248,779 231,465 Property, plant, and equipment 501,792 489,662 Less accumulated depreciation 231,206 223,406 Net property, plant, and equipment 270,586 266,256 OTHER ASSETS: Right-of-use assets 16,081 16,840 Goodwill 223,828 223,042 Intangible assets, net 229,018 232,887 Deferred compensation plan asset 16,477 12,812 Other 1,474 2,988 Total other assets 486,878 488,569 Total assets $ 1,006,243 $ 986,290 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable — trade $ 62,845 $ 59,835 Accrued payroll and employee benefits 15,750 20,092 Income tax payable 8,236 98 Environmental remediation 7,700 7,700 Other current liabilities (Note 8) 15,083 17,119 Total current liabilities 109,614 104,844 LONG-TERM LIABILITIES: Long-term debt 244,000 244,000 Long-term lease liabilities 13,703 14,457 Pension withdrawal liability 2,663 2,763 Deferred income taxes 25,065 25,110 Deferred compensation liability 17,330 14,850 Earnout liabilities 45,433 44,898 Other long-term liabilities 231 1,359 Total long-term liabilities 348,425 347,437 Total liabilities $ 458,039 $ 452,281 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock; authorized: 60,000,000 shares of $ 0.01 par value; 20,743,884 and 20,752,138 shares issued and outstanding as of June 28, 2026 and March 29, 2026, respectively 207 208 Additional paid-in capital 22,750 32,678 Retained earnings 524,425 500,142 Accumulated other comprehensive income 822 981 Total shareholders’ equity 548,204 534,009 Total liabilities and shareholders’ equity $ 1,006,243 $ 986,290 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 June 28, 2026 June 29, 2025 Sales $ 315,675 $ 293,272 Cost of sales ( 241,668 ) ( 220,910 ) Gross profit 74,007 72,362 Selling, general and administrative expenses ( 35,335 ) ( 31,029 ) Operating income 38,672 41,333 Interest expense, net ( 2,773 ) ( 3,269 ) Other income 1,425 942 Income before income taxes 37,324 39,006 Income tax expense ( 9,070 ) ( 9,831 ) Net income $ 28,254 $ 29,175 Weighted average number of shares outstanding - basic 20,777,481 20,717,485 Weighted average number of shares outstanding - diluted 20,853,991 20,810,562 Basic earnings per share $ 1.36 $ 1.41 Diluted earnings per share $ 1.35 $ 1.40 Cash dividends declared per common share $ 0.19 $ 0.18 See accompanying notes to condensed consolidated financial statements. 2 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands) Three months ended June 28, 2026 June 29, 2025 Net income $ 28,254 $ 29,175 Other comprehensive loss, net of tax: Unrealized loss on interest rate swap ( 159 ) ( 324 ) Total other comprehensive loss ( 159 ) ( 324 ) Total comprehensive income $ 28,095 $ 28,851 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 29, 2026 20,752,138 $ 208 $ 32,678 $ 500,142 $ 981 $ 534,009 Cash dividends declared and paid ($ 0.19 per share) — — — ( 3,971 ) — ( 3,971 ) Share-based compensation expense — — 2,235 — — 2,235 Vesting of restricted stock 70,859 1 ( 1 ) — — — Shares surrendered for payroll taxes ( 33,917 ) ( 1 ) ( 5,142 ) — — ( 5,143 ) Shares repurchased ( 45,196 ) ( 1 ) ( 7,020 ) — — ( 7,021 ) Other comprehensive loss, net of tax — — — — ( 159 ) ( 159 ) Net income — — — 28,254 — 28,254 BALANCE — June 28, 2026 20,743,884 $ 207 $ 22,750 $ 524,425 $ 822 $ 548,204 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 loss, 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 See accompanying notes to condensed consolidated financial statements. 4 HAWKINS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three months ended June 28, 2026 June 29, 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 28,254 $ 29,175 Reconciliation to cash flows: Depreciation and amortization 13,945 12,291 Change in fair value of earnout liabilities 535 ( 1,583 ) Operating leases 1,040 923 Gain on deferred compensation assets ( 1,425 ) ( 942 ) Stock compensation expense 2,235 2,212 Other, net 58 ( 25 ) Changes in operating accounts providing (using) cash: Trade receivables ( 12,462 ) ( 2,651 ) Inventories ( 1,474 ) ( 8,487 ) Accounts payable 2,218 ( 3,812 ) Accrued liabilities ( 6,448 ) ( 6,735 ) Lease liabilities ( 1,269 ) ( 973 ) Income taxes 9,029 9,831 Other, net 916 2,266 Net cash provided by operating activities 35,152 31,490 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant, and equipment ( 11,605 ) ( 13,544 ) Acquisitions ( 3,600 ) ( 151,328 ) Proceeds from asset disposals 260 327 Net cash used in investing activities ( 14,945 ) ( 164,545 ) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends declared and paid ( 3,971 ) ( 3,754 ) Payroll taxes paid in exchange for shares withheld ( 5,143 ) ( 3,028 ) Shares repurchased ( 7,021 ) — Payments on senior secured revolving loan ( 5,000 ) ( 10,000 ) Payments for debt issuance costs — ( 764 ) Borrowings on senior secured revolving loan 5,000 160,000 Other ( 9 ) — Net cash (used in) provided by financing activities ( 16,144 ) 142,454 NET INCREASE IN CASH AND CASH EQUIVALENTS 4,063 9,399 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,914 5,103 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,977 $ 14,502 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest $ 2,816 $ 3,286 Noncash investing activities - capital expenditures in accounts payable $ 3,001 $ 1,493 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 29, 2026 , 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 three months ended June 28, 2026 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 2026" refer to the fiscal year ended March 29, 2026, and references to "fiscal 2027" refer to the fiscal year ending March 28, 2027. 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, deferred compensation plan assets, accrued expenses, environmental remediations, short-term and long-term lease liabilities, pension withdrawal liability, deferred compensation liability, earnout 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 2026 , previously filed with the SEC. There have been no significant changes in our accounting policies since the end of fiscal 2026. Recently Issued Accounting Pronouncements The Financial Accounting Standards Board ("FASB") periodically issues Accounting Standards Updates ("ASUs") that amend the Financial Accounting Standards Codification ("ASC"). We evaluate the impact of the newly issued accounting guidance to determine the effect, if any, on our consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which clarifies interim reporting requirements, improves the organization of interim disclosure guidance, and introduces a disclosure principle for material events occurring since the end of the last annual reporting period. The guidance is effective for interim periods in fiscal years beginning after December 15, 2027, our fiscal 2029. We are currently evaluating the impact that the adoption of this ASU may have on our consolidated financial statements and interim disclosures in our first quarter, fiscal 2029 Form 10-Q and periodic reports thereafter. In September 2025, the FASB issued ASU 2025-06, Intangibles, Goodwill, and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements , which modernizes the recognition guidance requiring entities to begin capitalizing software costs when both of the following occur: (1) Management has authorized and committed funding to the software project and (2) It is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, our fiscal 2029, and interim periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statement disclosures in our first quarter, fiscal 2029 10-Q and periodic reports thereafter. 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, our fiscal 2028, and interim periods within fiscal years beginning after December 15, 2027, our fiscal 2029, 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 in our Form 10-K for fiscal 2028 and periodic reports thereafter. 6 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 the first quarter of fiscal 2027 and the first quarter of fiscal 2026, the results of operations since the acquisition date and the assets are presented in our Water Treatment segment. Costs associated with each acquisition were not material and were expensed as incurred. Fiscal 2027 Material Acquisitions We completed one immaterial acquisition in the first quarter of fiscal 2027 . Fiscal 2026 Material 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 at the acquisition date. The recognition of the earnout liability represented a noncash investing activity, as no cash was paid at inception. WaterSurplus is based in Rockford, IL and delivers sustainable water treatment solutions to customers throughout the United States. The following table summarizes the purchase consideration and fair values of assets acquired and liabilities assumed as of the date of acquisition: (In thousands) Cash paid $ 149,876 Present value of earnout liability 43,000 Total purchase consideration $ 192,876 Trade accounts receivable $ 3,030 Inventories 4,325 Other current assets 933 Property, plant, and equipment 12,887 Intangible assets Customer relationships 76,000 Trade names 6,200 Technology 12,000 Accounts payable — trade ( 2,169 ) Other current liabilities ( 2,934 ) Total fair value of assets acquired and liabilities assumed $ 110,272 Goodwill $ 82,604 The expected useful lives of the acquired intangible assets are 15 years for customer relationships, 15 years for trade names and 10 years for technology. The goodwill recognized as a result of this acquisition is expected to be deductible for tax purposes. We have completed the purchase price allocation. 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 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. Types of products sold within each operating segment help us to further evaluate the financial performance of our segments. The following tables disaggregate external customer net sales by major revenue stream for the three months ended June 28, 2026 and June 29, 2025: Three months ended June 28, 2026 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended, repackaged products or equipment (1) $ 140,037 $ — $ 45,860 $ 185,897 Bulk products (2) 16,296 — 12,602 28,898 Nutrition — 37,057 — 37,057 Food — 24,310 — 24,310 Pharmaceutical — 6,965 — 6,965 Agricultural — 27,914 — 27,914 Other 1,960 1,004 1,670 4,634 Total external customer sales $ 158,293 $ 97,250 $ 60,132 $ 315,675 Three months ended June 29, 2025 (In thousands) Water Treatment Food & Health Sciences Industrial Solutions Total Manufactured, blended, repackaged products or equipment (1) $ 136,347 $ — $ 41,318 $ 177,665 Bulk products (2) 11,969 — 11,844 23,813 Nutrition — 35,337 — 35,337 Food — 26,077 — 26,077 Pharmaceutical — 5,557 — 5,557 Agricultural — 21,469 — 21,469 Other 1,250 737 1,367 3,354 Total external customer sales $ 149,566 $ 89,177 $ 54,529 $ 293,272 (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. 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 June 28, 2026 June 29, 2025 Weighted-average common shares outstanding—basic 20,777,481 20,717,485 Dilutive impact of performance units and restricted stock 76,510 93,077 Weighted-average common shares outstanding—diluted 20,853,991 20,810,562 For each of the periods presented, there were no shares excluded from the calculation of weighted-average common shares for diluted EPS. 8 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 approximates fair value because of the short-term nature of these instruments. Because of the variable-rate nature of our debt under our credit facility, the carrying value of 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 and reported at fair value for each reporting period are an interest rate swap, marketable securities held in a deferred compensation retirement plan, and the earnout liabilities recorded in conjunction with the acquisitions of Water Solutions Unlimited, Inc. ("Water Solutions") and WaterSurplus. The interest rate swap is classified as other current assets on our condensed consolidated balance sheets. Assets held in a deferred compensation retirement plan are classified as other long-term assets on our condensed consolidated balance sheets, with the portion of the deferred compensation retirement plan assets expected to be paid within twelve months classified as current assets. The Water Solutions earnout liability is classified as other current liabilities on our balance sheets. The WaterSurplus earnout liability is classified as a long-term liability on our balance sheets. 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 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 June 28, 2026 and March 29, 2026. 0 (In thousands) June 28, 2026 March 29, 2026 Assets Deferred compensation plan assets Level 1 $ 16,966 $ 14,146 Interest rate swap Level 2 $ 1,109 $ 1,323 Liabilities WaterSurplus earnout liability Level 3 $ 45,433 $ 44,898 Water Solutions earnout liability Level 3 $ 4,529 $ 4,529 The changes in the earnout liability measured at fair value using Level 3 inputs were as follows: (In thousands) Earnout liability at March 29, 2026 $ 49,427 Accretion of WaterSurplus earnout liability Level 3 $ 535 Earnout liability at June 28, 2026 $ 49,962 9 Note 6 – Inventories Inventories at June 28, 2026 and March 29, 2026 consisted of the following: June 28, 2026 March 29, 2026 (In thousands) Inventory (FIFO basis) $ 106,201 $ 102,589 LIFO reserve ( 26,337 ) ( 24,390 ) Net inventory $ 79,864 $ 78,199 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 Other Identifiable 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 29, 2026 $ 170,880 $ 46,871 $ 5,291 $ 223,042 Addition, due to acquisitions 786 — — 786 Balance as of June 28, 2026 $ 171,666 $ 46,871 $ 5,291 $ 223,828 The following is a summary of our identifiable intangible assets as of June 28, 2026 and March 29, 2026: June 28, 2026 March 29, 2026 (In thousands) Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Finite-life intangible assets Customer relationships $ 285,254 $ ( 79,921 ) $ 205,333 $ 283,654 $ ( 75,216 ) $ 208,438 Trademarks and trade names $ 21,622 $ ( 9,939 ) $ 11,683 $ 21,622 $ ( 9,486 ) $ 12,136 Other finite-life intangible assets 16,573 ( 5,798 ) 10,775 16,526 ( 5,440 ) 11,086 Total finite-life intangible assets 323,449 ( 95,658 ) 227,791 321,802 ( 90,142 ) 231,660 Indefinite-life intangible assets 1,227 — 1,227 1,227 — 1,227 Total intangible assets $ 324,676 $ ( 95,658 ) $ 229,018 $ 323,029 $ ( 90,142 ) $ 232,887 Note 8 – Other Current Liabilities Other current liabilities at June 28, 2026 and March 29, 2026 consisted of the following: (In thousands) June 28, 2026 March 29, 2026 Short-term lease liability $ 2,962 $ 3,000 Contract liability 1,452 1,580 Accrued real estate taxes 1,084 1,224 Current portion of deferred compensation liability 489 1,334 Container deposits 1,444 1,383 Current portion of earnout liability 4,529 4,529 Other 3,123 4,069 Total $ 15,083 $ 17,119 10 Note 9 – Debt We are party to a second amended and restated credit agreement with U.S. Bank National Association (“U.S. Bank”) as administrative agent, sole lead arranger and sole book runner, and the other lenders from time to time party thereto (collectively, the “Lenders”), dated as of March 31, 2022 (and as amended, restated or modified from time to time, the “Credit Agreement”). A Joinder, Consent and Second Amendment dated April 25, 2025 increased the revolving commitment under the Credit Agreement to provide us with senior secured revolving credit facilities (the “Revolving Loan Facility”) totaling $ 400.0 million. A Third Amendment dated October 15, 2025, modified terms related to qualified receivables transactions, as defined in the Credit Agreement. The Revolving Loan Facility includes a $ 10.0 million letter of credit subfacility and $ 25.0 million swingline subfacility. The Revolving Loan Facility is secured by substantially all of our personal property assets and those of our subsidiaries, and is scheduled to mature on April 25, 2030. In the first quarter of fiscal 2026, we drew approximately $ 150 million of additional proceeds to acquire substantially all of the assets of WaterSurplus as discussed in Note 2. We may use other proceeds from the Revolving Loan Facility for working capital, capital expenditures, share repurchases, restricted payments and other acquisitions permitted under the Credit Agreement, and other general corporate purposes. We paid fees of approximately $ 1.0 million in fiscal 2026 associated with the April 2025 refinancing. 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 June 28, 2026, the effective interest rate on our borrowings was 4.3 %. As of June 28, 2026, we were in compliance with all required covenants. Debt at June 28, 2026 and March 29, 2026 consisted of the following: June 28, 2026 March 29, 2026 (In thousands) Revolving Loan Facility $ 244,000 $ 244,000 Note 10 – 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 2, 2023 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 24 % for the three months ended June 28, 2026 and 25 % for the three months ended June 29, 2025. The effective tax rate in both years was impacted by favorable tax provision adjustments recorded. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes. Note 11 – 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 2027 and fiscal 2026. 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 40,962 shares in the aggregate for fiscal 2027. 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 three months ended June 28, 2026: Shares Weighted- Average Grant Date Fair Value Unvested at beginning of period 136,846 $ 95.93 Granted 38,224 161.83 Vested ( 70,859 ) 76.60 Unvested at end of period 104,211 $ 133.25 We recorded compensation expense related to performance share units and restricted stock of $ 1.7 million for the three months ended June 28, 2026 and $ 1.8 million for the three months ended June 29, 2025. Substantially all of the compensation expense was recorded in selling, general and administrative expenses in the condensed consolidated statements of income. 11 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 June 28, 2026, 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 June 28, 2026 and June 29, 2025. During the second quarter of fiscal 2026, 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 June 28, 2026, 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 months ended June 28, 2026. No expense was recorded for the three months ended June 29, 2025. Note 12 – 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 months ended June 28, 2026, 45,196 shares were repurchased at an aggregate purchase price of $ 7.0 million, and during the three months ended June 29, 2025, no shares were repurchased. As of June 28, 2026, 686,348 shares remained available to be repurchased under the share repurchase program. Note 13 – Commitments and Contingencies Environmental Remediation. In 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, Minnesota facility during an expansion project. This charge was recorded as an operating expense within cost of sales in our fiscal 2024 condensed consolidated statement of income. 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 remediation liability is not discounted as management expects to incur these expenses within the next twelve months. Given the many uncertainties involved in assessing environmental matters, actual remediation expenses could differ from our estimates. While additional remediation expenses are reasonably possible to be incurred in future periods if new information or conditions are identified, we are unable to reasonably estimate the amount or range of any such additional expenses at this time. No additional expenses were incurred related to this liability during the three months ended June 28, 2026 and June 29, 2025. Note 14 – Segment Information 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. • Water Treatment Segment. Our Water Treatment Group specializes in providing chemicals, filtration media and systems, equipment, services and solutions for potable water, municipal and industrial wastewater, industrial process water, mainly 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. • Food and Health Sciences Segment. Our Food and Health Sciences Group specializes in processing and formulation solutions as well as ingredient distribution to manufacturers in the nutrition, food, pharmaceutical, and agricultural markets. This group 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. • Industrial Solutions Segment. Our Industrial Solutions Group specializes in providing industrial chemicals, products and services to industries such as industrial manufacturing, chemical processing, electronics, energy, plating, and surface finishing. This group’s principal products are acids and alkalis. This segment receives, stores and distributes various chemicals in bulk quantities, including liquid caustic soda, sulfuric acid, hydrochloric acid, urea, phosphoric acid, aqua ammonia and potassium hydroxide. This group performs customer blending of chemicals according to customer formulas and specifications and repackages bulk industrial chemicals to sell in smaller quantities to our customers. The Industrial Solutions group relies on a specially trained sales staff that works directly with customers on their specific needs. This segment conducts its business primarily through manufacturing locations and terminal operations. 12 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. 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. Raw materials are transferred between segments at material cost, capitalized freight, and capitalized internal production and warehousing costs, with the offset settled in a balance sheet clearing account. Capitalized freight and capitalized internal production and warehousing costs are calculated and applied to inventory on an item level basis using per unit estimates that are based on historical costs or time and effort measures as appropriate. We do not record intersegment sales, and no operating segments have been aggregated. In fiscal 2027 and 2026, 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 June 28, 2026: Sales $ 158,293 $ 97,250 $ 60,132 $ 315,675 Cost of sales - materials ( 94,481 ) ( 73,345 ) ( 47,858 ) Cost of sales - operational overhead ( 18,316 ) ( 4,630 ) ( 3,038 ) Selling, general, and administrative expenses ( 23,670 ) ( 8,028 ) ( 3,637 ) Operating income 21,826 11,247 5,599 38,672 Interest expense, net ( 2,773 ) Other income 1,425 Income tax expense ( 9,070 ) Net income 28,254 Identifiable assets* 578,033 249,411 143,706 971,150 Capital expenditures 8,006 1,697 1,902 11,605 Depreciation and amortization 8,345 3,213 2,387 13,945 Three months ended June 29, 2025: Sales $ 149,566 $ 89,177 $ 54,529 $ 293,272 Cost of sales - materials ( 89,159 ) ( 65,814 ) ( 42,848 ) Cost of sales - operational overhead ( 16,660 ) ( 4,015 ) ( 2,414 ) Selling, general, and administrative expenses ( 19,085 ) ( 8,381 ) ( 3,563 ) Operating income 24,662 10,967 5,704 41,333 Interest expense, net ( 3,269 ) Other income 942 Income tax expense ( 9,831 ) Net income 29,175 Identifiable assets* 569,354 249,315 132,575 951,244 Capital expenditures 7,560 3,013 2,971 13,544 Depreciation and amortization 6,904 3,200 2,187 12,291 *Unallocated assets not included, consisting primarily of cash and cash equivalents, prepaid expenses, and non-qualified deferred compensation plan assets of $ 35.1 million at June 28, 2026 and $ 37.0 million at June 29, 2025. 13