Hawkins, Inc.

What they do

Hawkins operates in three segments: Water Treatment, Food and Health Sciences, and Industrial Solutions. Water Treatment provides chemicals, equipment, and services for municipal and industrial water systems. Food and Health Sciences supplies ingredients and formulation services to nutrition, food, pharmaceutical, and agricultural markets. Industrial Solutions distributes bulk chemicals like acids and alkalis, and performs blending and repackaging.

Revenue drivers

• Water Treatment — Largest segment, Q1 FY2027 sales $158.3M, up 6%, driven by acquisitions and organic volume growth.
• Food and Health Sciences — Q1 FY2027 sales $97.3M, up 9%, with agricultural products growing 30% on higher volumes.
• Industrial Solutions — Q1 FY2027 sales $60.1M, up 10%, on increased volumes of manufactured, blended, and repackaged products.

Recent performance

For Q1 FY2027 (ended June 28, 2026), Hawkins reported record revenue of $315.7M, up 8%, and record gross profit of $74.0M, up 2%. Net income was $28.3M, down 3%, and diluted EPS was $1.35, down $0.05. Operating cash flow was $35.2M, up 12%, and adjusted EBITDA was a record $56.9M. All three segments grew revenue more than 5% year-over-year.

Strategy

Hawkins is executing a growth strategy in Water Treatment, including acquisitions like Aqua-Chem, Redbird, StillWaters, and PhillTech. Management expects to continue paying down debt, targeting a leverage ratio of 1.36x adjusted EBITDA. They plan to invest in higher-margin businesses and acquire accretive companies. They also expect to return to historical organic growth rates in fiscal 2027.

Risks

• Raw material cost volatility — Prices for key raw materials can rise or fall rapidly, impacting gross margins, as seen in Q1 FY2027 when LIFO costs reduced margin percentage.
• Intense competition — Hawkins faces significant competition from larger competitors with greater resources, which could pressure prices and margins.
• Integration of acquisitions — Recent acquisitions, including WaterSurplus with an earnout up to $53.7M, may not perform as expected or integrate smoothly.
• Product liability and recall risk — The business exposes Hawkins to potential product liability claims and recalls, which could harm financial results.

Outlook

Management expects raw material costs to stabilize after first-quarter volatility. They anticipate continued organic revenue growth at historical rates in fiscal 2027. They plan to sustain strong free cash flow and use it to pay down debt and fund acquisitions. The company remains focused on investing in higher-margin segments.