Hawkins Reverses Earnings Decline With Record Profit

The Tip Desk · October 27, 2026 · 3 min read

Diluted EPS rose 23% to $1.34 as Water Treatment sales grew 16% and adjusted EBITDA reached a record $59.1 million.

Hawkins, Inc. (HWKN), a water treatment and specialty ingredients company, reported record second-quarter results for the three months ended September 27, 2026, reversing a first-quarter earnings decline as year-over-year sales growth accelerated to 12%.

Sales were $313.8 million, up 12% from $280.4 million a year earlier, after 8% growth in the immediately preceding quarter. Organic sales rose 11%, with acquired businesses contributing about $3.7 million.

Water Treatment was the engine. Segment sales increased 16% to $175.0 million, after 6% growth in the first quarter. Organic sales in the segment rose 14%, which the company said was driven primarily by increased volumes and improved pricing on certain products, with growth broad-based across product lines and end markets and the municipal end market particularly strong. Acquired businesses added about $3.7 million.

Food & Health Sciences sales rose 5% to $76.7 million, slower than 9% growth in the first quarter, on higher volumes of nutrition, food ingredients and pharmaceutical products, partially offset by lower agricultural sales. Industrial Solutions sales increased 10% to $62.2 million, matching the first-quarter rate, on improved pricing and favorable product mix that more than offset lower volumes.

Gross profit rose 13% to a record $76.6 million, after 2% growth in the first quarter. The gross margin held at 24% of sales. Water Treatment gross profit increased 20% to $51.7 million, and the segment margin expanded to 30% of sales from 29% a year earlier.

Food & Health Sciences gross profit declined 4% to $14.9 million, and the segment margin compressed to 19% of sales from 21%, as lower margins in food and pharmaceutical products and a $0.5 million year-over-year LIFO hit more than offset higher sales. Industrial Solutions gross profit increased 12% to $10.0 million, with the margin holding at 16% of sales.

The company said the LIFO reserve increased and reduced gross profit by $1.9 million in the quarter, versus a $0.3 million reduction a year earlier. A $1.6 million year-over-year LIFO impact was partially offset by $1.3 million of refunds of previously paid tariffs recorded as a reduction of cost of sales. Gross profit was also pressured by higher fuel costs not fully recovered through freight charges.

Net income was $27.8 million, or $1.34 a share, up 23% from $22.6 million, or $1.08 a share, a year earlier, after a 4% year-over-year EPS decline in the first quarter. Adjusted EBITDA, a non-GAAP measure, rose 16% to a record $59.1 million, after a 1% increase in the first quarter. Trailing twelve-month adjusted EBITDA was $188.0 million.

SG&A expenses increased 3% to $34.7 million, and the SG&A ratio compressed to 11% of sales from 12% a year earlier. The effective income tax rate was 30%, versus 27% a year earlier, which the company attributed primarily to higher state income taxes and an increase in non-deductible items. The company said the full-year effective tax rate is expected to be approximately 25% to 27%.

During the quarter Hawkins repurchased $12 million of stock, paid down $15 million of debt and closed on Dave Symonds & Associates, a Florida water distributor. Leverage was 1.22 times trailing-twelve-month adjusted EBITDA at quarter-end, down from 1.37 times at fiscal 2026 year-end and 1.54 times a year earlier. Total debt was $229.0 million. Subsequent to quarter-end the company acquired Eagle Labs, adding two locations in Dallas–Fort Worth.

Chief Executive Officer Patrick Hawkins said second-half trends are expected to be consistent with the first half, noting that SG&A in the second half of fiscal 2026 benefited from a non-recurring $6.2 million reduction that will not recur in the second half of fiscal 2027.