Executive Summary

Q4 FY2025 delivered record revenue of $245.3M and diluted EPS of $0.78; both exceeded Wall Street consensus, with revenue beating by ~$14.6M (~6.3%) and EPS by ~$0.04 (~6%) driven by 21% Water Treatment growth and improved mix in Industrial. [*S&P Global estimates]
Full-year FY2025 revenue rose 6% to $974.4M and diluted EPS increased 12% to $4.03; adjusted EBITDA grew 17% to $167.5M, supported by acquisitions and organic progress in Water Treatment.
Management guided FY2026 revenue to surpass $1.0B for the first time, with EPS growing at a slower pace given higher interest and amortization from recent deals; leverage targeted below 1x adjusted EBITDA by end of FY2027.
Strategic catalysts: segment realignment starting Q1 FY2026 (Water Treatment, Health & Food Sciences, Industrial Solutions), the WaterSurplus acquisition expanding equipment/filtration capabilities, and continued M&A to accelerate higher-margin growth.

What Went Well and What Went Wrong

What Went Well

Record Q4 revenue ($245.3M, +10% YoY), gross profit ($52.2M, +15% YoY), operating income ($24.6M, +22% YoY), and adjusted EBITDA ($36.7M, +18% YoY), underscoring execution across segments.
Water Treatment segment led growth (+21% YoY to $105.0M), driven by $13.0M from acquired businesses and higher legacy volumes; management emphasized disciplined M&A as a growth engine.
CEO tone confident on surpassing $1.0B revenue in FY2026 and maintaining strong cash flow to fund investments and debt paydown: “We expect all of our business segments to grow and our revenue to surpass $1 billion…”

What Went Wrong

SG&A increased 19% YoY to $106.4M for the year, largely from acquisition-related costs (including $4.2M amortization of intangibles) and higher variable costs, pressuring operating leverage.
Leverage ratio rose to 0.86x at FY-end and above 1.0x post-WaterSurplus, reflecting acquisition financing despite strong cash generation; management targets <1x by end FY2027.
Industrial segment showed limited Q4 revenue growth (<1%), with prior quarters impacted by competitive pricing and lower commodity costs; mix improved in Q4 but remains an area to watch.

Financial Results

Quarterly performance (Q2–Q4 FY2025)

Metric	Q2 2025	Q3 2025	Q4 2025
Revenue ($USD Millions)	$247.0	$226.2	$245.3
Gross Profit ($USD Millions)	$60.2	$48.4	$52.2
Operating Income ($USD Millions)	$33.7	$21.1	$24.6
Diluted EPS ($USD)	$1.16	$0.72	$0.78

Q4 FY2025 actual vs. Wall Street consensus (S&P Global)

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$230.7*	$245.3	+$14.6 (+6.3%)
EPS ($USD)	$0.735*	$0.78	+$0.045 (+6.1%)

Values marked with * were retrieved from S&P Global.

Segment revenue (Q4 FY2025)

Segment	Revenue ($USD Millions)	YoY Growth
Water Treatment	$105.0	+21%
Industrial	$97.4	<1%
Health & Nutrition	$42.9	+9%

KPIs and balance sheet highlights

KPI	Q4/FY2025 Value
Adjusted EBITDA (Q4) ($USD Millions)	$36.7
Operating Cash Flow (FY) ($USD Millions)	$111.1
Total Debt (FY-end) ($USD Millions)	$149.0
Net Debt (FY-end) ($USD Millions)	$143.9
Leverage Ratio (FY-end)	0.86x adjusted EBITDA
SG&A (FY) ($USD Millions)	$106.4
Effective Tax Rate (FY)	~26%
Weighted Avg Diluted Shares (Q4)	20,848,118

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2026	Not provided	“Surpass $1 billion”	Raised (explicit target)
EPS	FY2026	Not provided	“Grow, but at a slower rate” due to higher interest and amortization	Cautioned (slower growth)
Leverage Ratio	FY2027 year-end target	Not provided	Below 1x adjusted EBITDA by end FY2027	New target
Effective Tax Rate	FY2025/FY2026	~26–27% (FY2025 outlook)	~26% reported for FY2025	Maintained near-range
Dividend	Quarterly	$0.18 per share declared	$0.18 per share (May 14, 2025)	Maintained

Earnings Call Themes & Trends

Note: We searched for the Q4 FY2025 earnings call transcript but could not find a public transcript in SEC filings, company site, or major transcript distributors as of this date.

Topic	Previous Mentions (Q2 and Q3)	Current Period (Q4)	Trend
M&A-driven Water Treatment expansion	Q2: 23% Water Treatment growth from acquisitions; leverage 0.65x . Q3: 22% growth, strong organic + acquisition contributions; leverage 0.70x .	Post-year WaterSurplus acquisition expands equipment and PFAS solutions; business expected to accelerate organic growth in Water Treatment ; Water Treatment +21% in Q4 .	Accelerating scale and capabilities
Segment realignment	Not mentioned in Q2/Q3 press releases.	New FY2026 reporting: Water Treatment, Health & Food Sciences, Industrial Solutions .	Strategic repositioning
Industrial pricing/mix	Q2: Lower selling prices from lower commodity costs; slight volume up . Q3: YoY decline; mix and LIFO effects .	Q4: Revenue flat YoY; favorable mix improved results .	Stabilizing
Health & Nutrition performance	Q2: Softer due to lower manufactured product sales . Q3: Improved with manufactured products up .	Q4: +9% revenue; mix helped margins .	Improving
Tax rate	Q3: Expected ~26–27% .	FY2025: ~26% .	Stable
Leverage/capital allocation	Q2: 0.65x; $30M debt paid down . Q3: 0.70x; net borrowings $10M .	FY-end 0.86x; >1.0x post-WaterSurplus; target <1x by end FY2027 .	Temporarily higher, targeted lower
Cash flow	Q2: $59.2M YTD CFO . Q3: $80.3M YTD CFO .	FY: $111.1M CFO supporting acquisitions and shareholder returns .	Robust and funding growth

Management Commentary

“Fiscal 2025 was another exciting year of growth… records in sales, gross margin, operating income, EPS, and adjusted EBITDA… seventh straight year of EPS growth… ROE ~20%.” — Patrick H. Hawkins, CEO .
“Our disciplined M&A strategy again contributed to the growth of our Water Treatment segment… completed four acquisitions during the year… subsequent to fiscal year-end, we acquired WaterSurplus.” .
“Looking ahead to fiscal 2026, we expect all of our business segments to grow and our revenue to surpass $1 billion… EPS to grow as well, although at a slower rate… expect… leverage ratio below 1x adjusted EBITDA by the end of fiscal year 2027.” .

Q&A Highlights

The company did not furnish an earnings call transcript via SEC filings or investor relations; no public transcript was located across major sources as of this report.

Estimates Context

Consensus for Q4 FY2025: Revenue $230.7M*, EPS $0.735*; Actuals: Revenue $245.3M, EPS $0.78 — both beats driven by Water Treatment growth and margin improvements; potential for FY2026 models to reflect >$1B revenue and higher amortization/interest drag on EPS growth. [*S&P Global estimates]
Estimate coverage for Q4 was limited (3 estimates each for revenue and EPS*), suggesting potential for dispersion and model updates post-segment realignment and WaterSurplus integration. [*S&P Global estimates]

Key Takeaways for Investors

Quality beat: revenue and EPS exceeded consensus on strong Water Treatment growth (+21% YoY) and better mix; adjusted EBITDA up 18% YoY in Q4.
Structural shift: segment realignment and WaterSurplus acquisition broaden the solution set (chemistry + equipment + PFAS removal), likely enhancing cross-sell and margin trajectory over time.
Near-term headwinds: higher interest and amortization temper EPS growth despite top-line expansion; watch leverage path (>1x post-deal vs. target <1x by FY2027).
Cash generation remains a strength: $111.1M FY operating cash flow funded M&A, capex, buybacks ($21M), and dividends ($15M).
Industrial and Health & Nutrition: signs of stabilization/improvement; monitor pricing dynamics and manufactured product volumes into FY2026.
Tactical catalyst: management’s >$1B FY2026 revenue target and continued M&A could support narrative momentum; estimate resets likely to incorporate segment changes and acquisition contributions.
Dividend continuity: $0.18 quarterly cash dividend declared alongside results.

S&P Global disclaimer: All consensus values marked with * were retrieved from S&P Global.

HAWKINS INC (HWKN)·Q4 2025 Earnings Summary