Hawkins (HWKN -2.57%), a specialty chemical and ingredient company focusing on water treatment, health and nutrition, and industrial solutions, announced its first quarter fiscal 2026 financial results on July 30, 2025. The headline news: the company posted record GAAP revenue and gross profit for Q1 FY2026, but fell short of analyst expectations for both revenue and earnings per share (GAAP). Actual GAAP revenue was $293.3 million, below the $302.3 million GAAP consensus, while reported GAAP earnings per share were $1.40 versus the $1.45 estimate. Despite these shortfalls, the company delivered significant top-line growth, with GAAP revenue increasing 15% and highlighted its Water Treatment business as a key driver for the period.
| Metric | Q1 FY26(3 mos. ended Jun 29, 2025) | Q1 FY26 Estimate | Q1 FY25(3 mos. ended Jun 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $1.40 | $1.45 | $1.38 | 1.4% |
| Revenue (GAAP) | $293.3 million | $302.3 million | $255.9 million | 14.6 % |
| Adjusted EBITDA | $57.6 million | $50.9 million | 13.2% | |
| Gross Profit | $72.4 million | $64.7 million | 11.9% | |
| Net Income | $29.2 million | $28.9 million | 1.0 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.
Business Overview and Strategic Focus
Hawkins is a U.S. company specializing in the formulation, blending, and distribution of chemicals and ingredients. Its business serves municipal water suppliers, food manufacturers, dietary supplement companies, and industrial clients. The company organizes its operations into three segments: Water Treatment, Food & Health Sciences, and Industrial Solutions.
Recently, the company has sharpened its focus on the Water Treatment segment, pursuing acquisitions to scale operations and capture higher-margin business. Hawkins relies on segment synergy, an extensive distribution network, and strict regulatory compliance, all of which underpin its core strategy. Sourcing of raw materials and maintaining strong supplier relationships are also critical factors for ongoing success, especially given supply chain variability and competitive pressures in its key markets.
Quarter in Review: Results and Operational Drivers
During Q1 FY2026, Hawkins achieved record revenue, climbing 15.0% year over year (GAAP). The Water Treatment segment led growth, with sales jumping 28% year-over-year to $149.6 million (GAAP). This was largely the result of the WaterSurplus acquisition, which contributed $29 million in new sales and expanded the company's engineering and filtration system offerings. Gross profit from the Water Treatment segment (GAAP) increased by $8.5 million, though gross margin for the Water Treatment segment slipped one percentage point to 29% due to integration and acquisition costs.
The Food & Health Sciences segment, focused on ingredients and manufacturing for food and dietary supplement businesses, reported GAAP revenue of $89.2 million, up 5% compared to the same period a year ago. However, gross profit in this area fell 3% (GAAP), as weaker pricing from heightened competition offset higher agriculture-related volumes. Margin percentage squeezed to 22% from 23% (GAAP), reflecting these pricing challenges.
Industrial Solutions, primarily supplying chemicals and packaged products to industrial manufacturers, saw modest revenue growth of 2%, rising to $54.5 million (GAAP). Cost increases and competitive pricing continued to pressure profitability in this segment, Operating income for the Industrial Solutions segment declined to $5.7 million from $6.1 million in Q1 FY2025.
Company-wide, gross profit (GAAP) reached $72.4 million, up 12%. Selling, general and administrative expenses (SG&A) jumped 24%, mainly from the integration of new Water Treatment operations and associated amortization. Net income (GAAP) edged up to $29.2 million. Adjusted EBITDA, a measure of recurring operating profit that removes one-time charges such as acquisition costs, climbed 13% to $57.6 million. The company financed recent acquisitions by increasing debt to $299.0 million, moving the leverage ratio to 1.6 times adjusted EBITDA from 0.86.
The company declared a quarterly dividend of $0.18 per share, continuing a trend of annual dividend growth in recent years.
Looking Forward: Outlook and Areas to Watch
Management said it expects all three segments to achieve profitable growth in FY2026 and reiterated its commitment to investing in higher-margin business areas. However, the company did not provide numeric revenue or profit guidance for the next quarter or fiscal year. It expects the effective annual tax rate to range from 26% to 27% for FY2026.
Going forward, investors may want to pay attention to how integration expenses from the WaterSurplus deal affect margins, as well as ongoing competition in Food & Health Sciences and Industrial Solutions. Balance sheet leverage is up after acquisition activity, so monitoring debt levels and interest expenses will be important. Weather and seasonality, especially for Water Treatment, could also influence segment results and working capital needs in coming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
