Hawkins 2025 Q4 Earnings Surpasses Expectations with Net Income Rising 18%

Hawkins (HWKN) reported its fiscal 2025 Q4 earnings on May 14th, 2025. Hawkins exceeded the Zacks Consensus Estimate with a quarterly EPS of $0.78 compared to the expected $0.74, marking an earnings surprise of 5.41%. The company also announced its expectation for all business segments to grow in fiscal 2026, projecting revenue to surpass $1 billion. Despite potential increases in interest and amortization expenses, the company anticipates maintaining strong cash flow and aims for a leverage ratio below 1x adjusted EBITDA by the end of fiscal year 2027.

Revenue

In the fourth quarter of fiscal 2025, Hawkins achieved sales of $245.3 million, marking a 10% year-over-year increase. The Water Treatment segment spearheaded this growth with a remarkable 21% rise, reaching $105.0 million, primarily driven by $13.0 million in sales from acquired businesses and increased sales volume. Meanwhile, the Industrial segment saw a slight uptick of less than 1%, totaling $97.4 million, attributed to a favorable product mix. The Health and Nutrition segment contributed an additional $42.9 million, reflecting a 9% increase due to enhanced sales of manufactured products.

Earnings/Net Income

Hawkins's EPS rose 17.3% to $0.78 in 2025 Q4 from $0.67 in 2024 Q4, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $16.33 million in 2025 Q4, marking 18.0% growth from $13.83 million in 2024 Q4. The Company has sustained profitability for 17 years over the corresponding fiscal quarter, reflecting stable business performance. The EPS performance indicates a positive outlook for Hawkins.

Post-Earnings Price Action Review

The strategy of acquiring Hawkins (HWKN) shares during periods of revenue shortfall and holding for 30 days yielded favorable results. This "Buy the Dip" approach capitalized on market reactions to disappointing revenue announcements, effectively identifying potential dips by calculating the day's range and the proximity of the closing price to the low. The assumption was that a subsequent upward move was likely, proving effective as it surpassed the benchmark "buy and hold" strategy, offering lower drawdowns and a higher win rate. Backtesting demonstrated a correlation between a decreased close distance percentage and an increased win rate, underscoring the strategy's success in such scenarios.

CEO Commentary

“Fiscal 2025 was another exciting year of growth for our company,” stated Patrick H. Hawkins, Chief Executive Officer and President. The company achieved records in sales, gross margin, operating income, EPS, and adjusted EBITDA, marking the seventh consecutive year of EPS growth and delivering a return on equity of approximately 20%. Hawkins highlighted the successful execution of their disciplined M&A strategy, which bolstered the Water Treatment segment's growth. Although sales in the Industrial and Health and Nutrition segments declined for the year, both saw improvements in the fourth quarter, contributing to a 15% increase in overall operating income.

Guidance

Looking ahead to fiscal 2026, Hawkins stated, “we expect all of our business segments to grow and our revenue to surpass $1 billion for the first time.” While EPS growth is anticipated, it may occur at a slower rate due to increased interest and amortization expenses from recent acquisitions. The company expects to maintain strong cash flow and aims to achieve a leverage ratio below 1x adjusted EBITDA by the end of fiscal year 2027, allowing for future growth investments and debt reduction.

Additional News

Hawkins, Inc. continues to actively pursue its M&A strategy, completing four acquisitions during fiscal 2025, including Intercoastal Trading, Inc., Wofford Water Service, Inc., Waterguard, Inc., and Amerochem Corporation. Post-fiscal year, they acquired WaterSurplus, further expanding their Water Treatment portfolio. The company emphasizes shareholder returns, having increased cash dividends to $0.70 per share, marking the 40th consecutive year of dividend payments. These strategic moves reflect Hawkins' focus on sustainable growth and delivering value to stakeholders, ensuring robust financial positioning for future investments.