Hawkins — Financial Results
Revenue Grew 11% to Over $1 Billion, Powered by Water Treatment Acquisitions
| Metric | Fiscal 2025 | Fiscal 2026 | Change |
|---|---|---|---|
| Total Sales | $974.4M | $1,083.7M | +11% |
| Water Treatment Sales | $446.5M | $543.3M | +22% |
| Food & Health Sciences Sales | $322.6M | $320.7M | -1% |
| Industrial Solutions Sales | $205.4M | $219.7M | +7% |
Sales crossed the $1 billion mark for the first time, with the Water Treatment segment driving most of the growth — $83.3 million of that segment's $96.8 million gain came directly from businesses acquired during the year. Food and Health Sciences slipped slightly due to competitive pricing pressure (rivals offering lower prices, forcing the company to match them).
A Major Acquisition Reshaped the Business — and the Balance Sheet
The company acquired six businesses in fiscal 2026, but one dominated: WaterSurplus, a nationwide water treatment solutions provider, bought for $149.9 million upfront, plus a potential additional $53.7 million earnout (bonus payment tied to future profit targets over five years). Total acquisition spending was $167.1 million, more than double the $87.4 million spent in fiscal 2025. This growth-by-acquisition strategy is clearly central to how the company expands.
Profit Margins Edged Lower as Costs Rose Faster Than Revenue
| Metric | Fiscal 2025 | Fiscal 2026 |
|---|---|---|
| Gross Profit Margin | 23.1% | 22.6% |
| Operating Income Margin | 12.2% | 11.2% |
| Net Income Margin | 8.7% | 7.5% |
While gross profit dollars grew by $19.5 million, margins ticked down across the board. The acquired businesses brought higher SG&A (selling, general and administrative) costs — $19.3 million in added expenses, including $8.9 million in amortization of intangibles (the annual accounting cost of spreading out the price paid for acquired brand names, customer lists, etc.). Rising raw material costs also trimmed margins slightly through the LIFO inventory method (an accounting approach that records the most recent, higher-cost inventory first).
Earnings Per Share Dipped Despite Strong Revenue Growth
Diluted EPS (earnings per share after accounting for all potential shares) fell from $4.03 to $3.91, a 3% decline. The drop reflects higher interest costs and acquisition-related expenses eating into profits even as the top line grew. On a pro forma basis (adjusting out certain one-time items), EPS actually rose 9% to $3.95, suggesting the underlying business performed better than the headline number implies.
Interest Costs More Than Doubled After Debt-Funded Acquisitions
Interest expense jumped from $5.4 million to $13.5 million — a 150% increase — because the company borrowed heavily to fund its acquisitions. At year-end, $244 million was outstanding on a $400 million revolving credit facility (essentially a large corporate line of credit) at an effective rate of 4.4%. The facility matures in April 2030, and the company says it was in full compliance with all loan conditions.
Operating Cash Flow Was a Bright Spot, Up 30%
Operating cash flow — the cash generated from running the business day-to-day, before investments and financing — rose 30% to $144.3 million, driven by improved management of inventory and receivables. This is an encouraging sign that the core business is converting profits into real cash efficiently, even as reported earnings faced headwinds from acquisition costs.