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HAWKINS INC (HWKN)·Q3 2025 Earnings Summary

Executive Summary

  • Record Q3 revenue ($226.2M, +8% YoY), gross profit ($48.4M, +15%), and operating income ($21.1M, +14%); EPS rose to $0.72 (vs. $0.71) despite an unusually favorable tax adjustment in the prior year that benefited last year’s EPS by ~$0.08 .
  • Growth remained concentrated in Water Treatment: revenue +22% YoY to $99.8M, with ~9% organic volume growth and acquisition contribution; Industrial declined ~1% on lower commodity-driven pricing; Health & Nutrition +3% on stronger manufactured product sales .
  • Balance sheet solid: total debt $114.0M, leverage 0.70x TTM pro forma adjusted EBITDA; TTM adjusted EBITDA $161.8M; working capital +$27M vs. FY24 year-end on seasonality and inventory build .
  • Estimate context: S&P Global consensus was unavailable via our feed at time of analysis; third-party sources indicate a revenue beat ($226.2M vs. ~$219.2M) but an EPS miss ($0.72 vs. ~$0.77–$0.78), a likely stock reaction catalyst alongside continued Water Treatment outperformance and Industrial pricing normalization .

What Went Well and What Went Wrong

  • What Went Well

    • Water Treatment momentum: revenue +22% YoY to $99.8M; organic volume +9% with acquisition tailwinds; segment gross profit +29% to $26.0M (26% margin) .
    • Mixed pricing backdrop navigated: consolidated gross margin expanded to 21% (from 20%) despite a smaller LIFO tailwind this year (+$0.8M vs. +$2.5M last year) .
    • Record operating performance: operating income $21.1M (27th consecutive YoY increase), adjusted EBITDA $33.6M (+13% YoY), TTM adjusted EBITDA $162M .

  • What Went Wrong

    • Industrial segment revenue -1% YoY to $92.0M; lower selling prices from reduced raw material costs and mix offset slight volume gains; Industrial gross profit -8% YoY .
    • SG&A up 15% YoY to $27.4M (12% of sales) from integration costs and intangible amortization tied to acquisitions (+$1.9M incremental costs; $0.8M of which amortization) .
    • EPS growth muted by tax normalization: 26% effective tax rate vs. 18% last year’s unusually favorable rate; management expects FY tax rate ~26–27% .

Financial Results

Recent quarterly performance (sequential trend)

MetricQ1 FY2025Q2 FY2025Q3 FY2025
Revenue ($M)$255.9 $247.0 $226.2
Gross Profit ($M)$64.7 $60.2 $48.4
Gross Margin %25% 24% 21%
Operating Income ($M)$39.8 $33.7 $21.1
Diluted EPS ($)$1.38 $1.16 $0.72
Adjusted EBITDA ($M, non-GAAP)$50.9 $46.3 $33.6

Q3 year-over-year comparison

MetricQ3 FY2024Q3 FY2025
Revenue ($M)$208.5 $226.2
Gross Profit ($M)$42.2 $48.4
Gross Margin %20% 21%
Operating Income ($M)$18.5 $21.1
Diluted EPS ($)$0.71 $0.72

Q3 segment breakdown

SegmentSales ($M)YoYGross Profit ($M)YoYOperating Income ($M)YoY
Water Treatment$99.8 +22% $26.0 +29% $10.0 +28%
Industrial$92.0 -1% $15.2 -8% $8.1 -12%
Health & Nutrition$34.5 +3% $7.2 +31% $3.0 +98%

Key KPIs

KPIQ3 FY2025
TTM Adjusted EBITDA ($M)$161.8
Leverage Ratio (Net Debt/TTM Adj. EBITDA, pro forma)0.70x
Total Debt ($M)$114.0
Working Capital Δ vs. FY24 YE+$27M
LIFO Impact on GP (QoQ item)+$0.8M this Q vs. +$2.5M LYQ
Water Treatment Organic Volume Growth~9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quantitative guidanceFY2025None providedNone providedMaintained (no formal ranges)
Tax Rate (Effective)FY2025~26–27% (reiterated)~26–27%Maintained
Segment OutlookNear-termWT growth; H&N resume growth; Industrial similar to 1HExpect continued WT and H&N growth; Industrial similar to first nine monthsMaintained qualitative outlook
DividendQuarterly$0.18 declared Oct 30$0.18 declared Jan 29 (pay 2/28, record 2/14)Maintained

Note: Hawkins does not provide formal revenue/EPS/margin guidance ranges; commentary focuses on trajectory by segment .

Earnings Call Themes & Trends

(Transcript not available in our sources; themes derived from quarterly releases.)

TopicPrevious Mentions (Q1 FY2025 and Q2 FY2025)Current Period (Q3 FY2025)Trend
Water Treatment growth and M&AWT became largest segment; +25% revenue YoY in Q1; two acquisitions closed; synergies realized . Q2 WT +23% YoY, acquisition-led; organic volumes flat due to weather .WT +22% YoY; ~9% organic volume growth plus acquisition lift; seven acquisitions in past 18 months cited as drivers .Positive, accelerating organic growth alongside acquisition benefits.
Industrial pricing/mixQ1 revenue -15% on lower commodity prices; volumes flat; GP improved on unit margins . Q2 revenue -9%; volumes slightly up; competitive pricing pressures .Revenue -1%; sequential improvement noted; pricing still pressured by lower raw material costs and mix .Stabilizing sequentially; pricing normalization still a headwind.
Health & Nutrition demandQ1 revenue slightly down; GP +24% on improved margins . Q2 revenue -12% on softer demand for manufactured products .Revenue +3%; GP +31% on higher manufactured product sales .Recovery signs with improved mix.
LIFO/Inventory impactsQ1: LIFO increased, reducing GP by $0.4M . Q2: no LIFO impact; LY had +$3.2M benefit .Q3: LIFO decreased, boosting GP by $0.8M; LY had +$2.5M .Less favorable vs. LY but modest tailwind this quarter.
Balance sheet/leverageQ1 leverage 0.84x; debt $134M; active M&A . Q2 leverage 0.65x; paid down $30M debt .Leverage 0.70x; total debt $114M; working capital seasonality; continued M&A .Low leverage sustained with ongoing M&A.
OutlookQ1: expect all segments to grow profitability . Q2: expect WT growth; H&N resume growth; Industrial similar near-term .Maintain similar outlook: continued WT and H&N growth; Industrial similar to first nine months .Consistent, cautious on Industrial; constructive on WT/H&N.

Management Commentary

  • “For each of the last four quarters, we have achieved record year-over-year performance… our record performance was once again driven by the Water Treatment business… strong revenue growth of 22%… with… strong organic volume growth of 9%.” — Patrick H. Hawkins, CEO .
  • “Our balance sheet continues to be strong… our net borrowings of $10 million helped fund our acquisition of Water Guard… leverage ratio was 0.7x trailing 12-month proforma adjusted EBITDA.” .
  • “As we close out our fiscal year, we expect continued growth within the Water Treatment and Health and Nutrition segments… Industrial… similar to the first nine months of fiscal 2025.” .

Q&A Highlights

  • Earnings call transcript was not available in our document set; no public Q&A details to cite. Commentary above reflects prepared remarks within the press release .

Estimates Context

  • S&P Global consensus estimates: unavailable via our feed at the time of analysis; values could not be retrieved. Values retrieved from S&P Global were unavailable due to request limit.
  • Third-party proxies indicate: Q3 revenue $226.2M vs. ~$219.2M consensus (beat ~+$7.0M); EPS $0.72 vs. ~$0.77–$0.78 consensus (miss ~$0.05–$0.06). Source references: MarketBeat and Zacks/Yahoo .

Q3 actuals vs. external consensus proxies

MetricActualConsensus (proxy)Surprise
Revenue ($M)$226.2 ~$219.2 +$7.0
Diluted EPS ($)$0.72 ~$0.77–$0.78 -$0.05 to -$0.06

Key Takeaways for Investors

  • Water Treatment remains the core growth engine (22% YoY; ~9% organic), validating the acquisition-led strategy and providing durable margin support; continued focus here underpins the medium-term thesis .
  • Industrial pricing headwinds appear to be moderating sequentially; watch for commodity stabilization and mix to improve Industrial profitability into FY26 .
  • EPS underperformance vs. external consensus likely reflects a normalized tax rate and higher SG&A from acquisitions; these are investment/structural costs rather than demand-driven issues, suggesting limited impact on intrinsic trajectory .
  • Balance sheet capacity intact (0.70x leverage; $161.8M TTM adj. EBITDA), enabling continued tuck-ins; dividend maintained at $0.18, reinforcing capital return consistency .
  • Near-term trading setup: potential volatility around EPS miss headlines offset by revenue/WT strength; any pullbacks could be supported by sustained WT growth and improving H&N mix .
  • Monitor integration efficiency and SG&A trajectory as acquisition cadence continues; amortization and integration costs were notable this quarter .
  • Post-quarter M&A momentum continues (Amerochem in NC), deepening WT footprint; reinforces strategy of adding facilities annually .

Additional Items and Prior Quarter Context

  • Prior quarters:
    • Q1 FY2025: Revenue $255.9M; EPS $1.38; WT +25% YoY; record profitability; leverage 0.84x .
    • Q2 FY2025: Revenue $247.0M; EPS $1.16; WT +23% YoY; leverage 0.65x after $30M debt paydown .
  • Q3 dividend declaration: $0.18 per share, payable 2/28/25 (record 2/14/25) .
  • Post-quarter M&A: acquired Amerochem’s assets, adding a second NC water treatment acquisition and expanding to 62 facilities .

Source Documents Read

  • Q3 FY2025 8-K and Exhibit 99.1 press release (full financials and segment tables) .
  • Q2 FY2025 8-K and press release (trend analysis) .
  • Q1 FY2025 8-K and press release (trend analysis) .
  • Other relevant Q3 period press releases: dividend declaration ; post-quarter Amerochem acquisition .
  • External estimate proxies due to S&P Global data unavailability: MarketBeat and Yahoo/Zacks .

Earnings call transcript was not found in our document corpus for this quarter.