A maker and distributor of chemicals and specialty ingredients, Hawkins Inc. supplies water-treatment chemicals to cities and pools, plus industrial chemicals and custom blending for customers in mining, agriculture, and electronics. Founded in 1938 in Minneapolis by brothers Kent and Howard "Curly" Hawkins, it began by selling industrial chemicals to local factories. The company still carries the founders' family name—not to be confused with an unrelated Indian maker of pressure cookers.
All three segments grew over 5%, but a LIFO charge and higher freight costs compressed gross margin to 23.4%, driving a 6.4% drop in operating income.
Every grew — the first time in over a year. rose 7.6% to $315.7 million, but fell 6.4% to $38.7 million as a $1.9 million increase and higher freight costs pushed down 1.2 points to 23.4%. The top line is broadening, but cost pressures are now eating into the profit those sales generate.
Key takeaways
rose 7.6% to $315.7 million, with all three segments — Water Treatment, Food & Health Sciences, and Industrial Solutions — growing more than 5% for the first time since the realignment.
narrowed 1.2 points to 23.4%, as a $1.9 million increase from rising raw material costs and higher freight expenses more than offset the benefit of higher sales.
fell 6.4% to $38.7 million, as a 14% increase in SG&A to $35.3 million — including $2.1 million from acquired businesses and a $1.9 million favorable adjustment in the prior-year period that did not repeat — consumed the modest gain.
Section summaries
Management's Discussion and Analysis
Q1 FY2027 sales rose 8% to $315.7M, but operating income fell 6% to $38.7M on LIFO and freight cost pressure.
⌄
Sales increased $22.4M, or 8%, to $315.7M, with all three segments growing more than 5% .
Water Treatment sales rose 6% to $158.3M, helped by improved pricing, higher volumes, and $6.9M from acquired businesses.
declined 3.2% to $28.3 million, and fell 3.6% to $1.35, as higher from the debt taken on to fund the WaterSurplus acquisition continued to weigh on the bottom line.
rose 11.6% to $35.2 million, and the company repurchased $7.0 million of common stock while holding steady at $244.0 million.
What changed
The , flagged as a potential after fiscal 2026's $1.5 million unfavorable increase, became a more material drag this quarter with a $1.9 million charge that directly compressed .
Food & Health Sciences, which had raised concerns after a 10% drop in Q3 fiscal 2026, rebounded with 9% growth to $97.3 million on higher agricultural, nutrition, and pharmaceutical volumes.
Industrial Solutions posted a second consecutive quarter of growth at 10%, following an 11% increase in Q2, suggesting the 's recovery after six quarters of decline is gaining traction rather than proving temporary.
The $244.0 million debt load remained unchanged sequentially, pausing the deleveraging that had begun with a $34.9 million reduction in Q3 fiscal 2026, as the company directed cash toward $7.0 million in share repurchases instead.
What to watch
Whether the increase moderates in Q2, or if rising raw material costs continue to pressure below the 23.4% level reported this quarter.
Food & Health Sciences trajectory in Q2: whether the 9% growth this quarter marks a sustained recovery after the prior-year's 10% decline, or if the 's performance remains uneven.
Debt reduction pace: with flat at $244.0 million and only $60 million hedged, whether is directed toward deleveraging or further share repurchases and acquisitions.
impact as the $60 million interest rate swap approaches its May 2027 maturity, leaving approximately $184 million of variable-rate debt exposed to rate changes.
Food & Health Sciences sales rose 9% to $97.3M on higher agricultural, nutrition, and pharmaceutical volumes, partly offset by lower food ingredients volumes.
Industrial Solutions sales rose 10% to $60.1M on higher volumes of manufactured, blended, and repackaged products.
rose only 2% to $74.0M as a $1.9M increase and higher freight costs compressed to 23% from 25%.
SG&A rose 14% to $35.3M, including $2.1M from acquired businesses and a $1.9M non-recurring favorable adjustment in the prior-year period.
was $35.2M, up from $31.5M, and the company repurchased $7.0M of common stock while holding $244.0M outstanding on its Revolving Loan Facility.
Quantitative and Qualitative Disclosures About Market Risk
We are subject to the risk inherent in the cyclical nature of commodity chemical prices. However, we do not currently purchase forward contracts or otherwise engage in hedging activities with respect to the purchase of commodity chemicals. We attempt to pass changes in the cost…
⌄
We are subject to the risk inherent in the cyclical nature of commodity chemical prices. However, we do not currently purchase forward contracts or otherwise engage in hedging activities with respect to the purchase of commodity chemicals. We attempt to pass changes in the cost of our materials to our customers. However, there are no assurances that we will be able to pass on the increases in the future.
We are exposed to market risks related to interest rates. Our exposure to changes in interest rates is primarily related to borrowings under our Revolving Loan Facility. We have in place an interest rate swap agreement to manage the risk associated with a portion of our variable-rate long-term debt. The interest rate swap involves the exchange of fixed-rate and variable-rate payments without the exchange of the underlying notional amount on which the interest payments are calculated. The notional amount of the swap agreement is $60.0 million, and it will terminate on May 1, 2027. As of June 28, 2026, a 25-basis point change in interest rates on our unhedged variable-rate debt would potentially increase or decrease our annual interest expense by approximately $0.5 million.
Other types of market risk, such as foreign currency risk, do not arise in the normal course of our business activities.
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries are a party or of which any of our property is the subject.
⌄
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries are a party or of which any of our property is the subject.