Business Overview and History Hawkins, Inc. (HWKN) is a leading specialty chemical and ingredients company that has been formulating, distributing, blending, and manufacturing products for its Industrial, Water Treatment, and Health & Nutrition customers since 1938. With a rich history spanning over 80 years, Hawkins has evolved into a diversified and resilient player in the specialty chemicals industry, leveraging its strong technical expertise and customer-centric approach to drive consistent growth and profitability.
Headquartered in Roseville, Minnesota, Hawkins operates a network of 61 facilities across 28 states, serving a diverse customer base with a focus on three key business segments: Industrial, Water Treatment, and Health & Nutrition. The company's origins can be traced back to 1938, when it was founded as a small chemical distribution business. In its early years, Hawkins primarily operated as a distributor of bulk chemicals with a strong focus on customer service. Over time, the company expanded its business by increasing its sales of value-added chemicals and specialty ingredients, including manufacturing, blending, and repackaging certain products.
Hawkins has pursued a growth strategy that combines organic expansion with strategic acquisitions. In the third quarter of fiscal 2024, the company acquired Miami Products Chemical Company, a bleach manufacturer and distributor serving customers primarily throughout Ohio and the surrounding region. This acquisition allowed Hawkins to expand its capabilities and customer base in the Water Treatment segment. Additionally, in the second quarter of fiscal 2024, Hawkins acquired the assets of EcoTech Enterprises, Inc., a water treatment chemical distribution company operating primarily in Arkansas. The following quarter, the company acquired the assets of Water Solutions Unlimited, Inc., a manufacturer and distributor of water treatment chemicals serving customers primarily throughout Indiana, Illinois, and Michigan.
Despite its success, Hawkins has faced challenges. In the fourth quarter of fiscal 2024, the company recorded a liability of $7.7 million related to estimated remediation expenses associated with perchlorinated biphenyls (PCBs) discovered in the soil at its Rosemount, Minnesota facility during an expansion project. While the source of the PCBs is unknown, this represented a significant environmental issue that the company had to address.
Hawkins' commitment to innovation, safety, and environmental responsibility has been integral to its success. The company continuously invests in research and development to enhance its product offerings and stay ahead of evolving customer needs. Hawkins also places a strong emphasis on workplace safety, having consistently maintained an excellent safety record, and it remains dedicated to sustainable business practices that minimize its environmental impact.
Financial Performance and Ratios Hawkins has demonstrated a strong financial track record, with a history of steady revenue growth and profitability. In the fiscal year ended March 31, 2024, the company reported total revenue of $919.16 million and net income of $75.36 million. The company's gross profit margin for the same period was 21.1%, and its operating profit margin was 11.3%. Operating cash flow for fiscal 2024 was $159.50 million, with free cash flow of $119.35 million.
For the most recent quarter (Q2 2025), Hawkins reported revenue of $247.03 million, up 4% year-over-year, and net income of $24.12 million, also up 4% year-over-year. Operating cash flow for the quarter was $41.63 million, with free cash flow of $30.99 million. The increase in revenue and profitability was primarily driven by the strong performance in the Water Treatment segment, which grew 23% year-over-year, offsetting slight softness in the Industrial and Health & Nutrition segments.
Liquidity The company's balance sheet remains healthy, with a current ratio of 2.27 and a quick ratio of 1.39 as of the most recent quarter, indicating a robust liquidity position. Hawkins' debt-to-equity ratio stood at 0.23, suggesting a conservative capital structure. The company's return on equity (ROE) and return on assets (ROA) for the fiscal year ended March 31, 2024, were 18.6% and 11.4%, respectively, demonstrating efficient utilization of its capital and assets.
As of the most recent quarter, Hawkins had $7.53 million in cash and access to a $250 million revolving credit facility, providing ample liquidity for operations and potential acquisitions.
Business Segments Hawkins operates through three main reportable segments: Water Treatment, Industrial, and Health and Nutrition.
The Water Treatment segment is Hawkins' largest, accounting for approximately 48% of total sales in the recent quarter. This segment includes manufactured, blended, or repackaged products as well as distributed specialty water treatment products. Bulk commodity products made up around 9% of Water Treatment segment sales in the recent quarter and the first half of the fiscal year. Gross profit margins in this segment were around 29% in the recent quarter and year-to-date period, reflecting the value-added nature of many products. The Water Treatment segment has seen significant growth, with sales increasing 23-24% year-over-year in both the recent quarter and first half of the fiscal year, driven by acquisitions completed in fiscal 2024 and 2025.
The Industrial segment accounted for approximately 36% of Hawkins' total sales in the recent quarter. This segment includes manufactured, blended, or repackaged industrial products as well as distributed specialty industrial products. Bulk commodity products made up around 15% of Industrial segment sales in the recent quarter and 14% in the first half. Gross margins in the Industrial segment were around 20% in the recent quarter and 21% year-to-date. Industrial segment sales declined 9% year-over-year in the recent quarter, though they were down only 12% in the first half, as lower selling prices on certain products due to competitive pressures and reduced raw material costs offset a slight increase in overall volumes.
The Health and Nutrition segment represented approximately 16% of Hawkins' total sales in the recent quarter. This segment includes manufactured, processed, or repackaged health and nutrition products as well as distributed specialty health and nutrition products. Gross margins in this segment were around 20% in the recent quarter and 21% year-to-date. Sales in the Health and Nutrition segment declined 12% year-over-year in the recent quarter and 8% in the first half, due to lower sales of manufactured products driven by reduced volumes and selling prices amid decreased demand for certain products.
Recent Developments and Outlook Hawkins has continued to execute its growth strategy, further strengthening its market presence through strategic acquisitions. In the second quarter of fiscal 2025, the company acquired the assets of Waterguard, Inc., a North Carolina-based distributor of water treatment chemicals and equipment, for $18 million. This acquisition aligns with Hawkins' ongoing efforts to expand its Water Treatment segment and enhance its geographic reach.
In fiscal 2024, HWKN completed several acquisitions to expand its Water Treatment segment, including Intercoastal Trading ($22M), Wofford Water Service ($3.4M), and Industrial Research ($4.6M). These acquisitions helped drive 23% year-over-year growth in the segment during the most recent quarter.
Looking ahead, the company remains focused on capitalizing on the positive industry trends in its core markets. In the Water Treatment segment, Hawkins is well-positioned to benefit from the increasing demand for water treatment solutions driven by aging infrastructure, stringent environmental regulations, and the need for sustainable water management. The Health & Nutrition segment is also poised for growth, as consumer awareness and demand for high-quality, innovative dietary supplements and functional ingredients continue to rise.
The specialty chemicals industry has seen steady growth, with a compound annual growth rate (CAGR) of around 5% over the past 5 years, driven by increasing demand from end markets like water treatment, pharmaceuticals, and personal care. Hawkins has been able to capitalize on these industry trends through strategic acquisitions and new product development.
Risks and Challenges While Hawkins has demonstrated resilience and adaptability, the company faces several risks and challenges that could impact its future performance. The specialty chemicals industry is highly competitive, with the company competing against larger, well-established players as well as smaller regional competitors. Fluctuations in raw material prices and supply chain disruptions could also affect Hawkins' profitability and operational efficiency.
Additionally, the company's growth strategy, which involves strategic acquisitions, carries integration and execution risks. Failure to successfully integrate acquired businesses or realize the expected synergies could hamper Hawkins' ability to achieve its growth targets.
Regulatory changes in the industries Hawkins serves, particularly in the areas of environmental compliance and product safety, pose another risk that the company must navigate effectively. Failure to comply with these regulations could result in significant fines, legal liabilities, and reputational damage.
Conclusion Hawkins, Inc. has distinguished itself as a formidable player in the specialty chemicals industry, with a proven track record of growth, innovation, and operational excellence. The company's diversified business model, strong technical capabilities, and customer-centric approach have been instrumental in its success. As Hawkins continues to capitalize on industry trends and execute its strategic initiatives, the company appears well-positioned to maintain its momentum and drive long-term value for its shareholders. With a solid financial position, manageable leverage, ample liquidity, and strong cash flow generation, Hawkins remains well-equipped to continue executing its growth strategy through a combination of organic initiatives and strategic M&A.