UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 201928, 2020
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-7647
HAWKINS, INC.
HAWKINS, INC.
(Exact name of registrant as specified in its charter) 

Minnesota41-0771293
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)

2381 Rosegate, Roseville, Minnesota55113
(Address of principal executive offices)(Zip code)

(612) 331-6910
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.05 per shareHWKNNasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES  ý    NO  ¨Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   YES  ý    NO  ¨Yes   ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Large accelerated filer¨Accelerated filerý
Non-accelerated filer¨☐Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
YES  ¨    NO  ýYes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
CLASSShares Outstanding at July 26, 201924, 2020
Common Stock, par value $.05 per share10,665,22710,664,763







HAWKINS, INC.
INDEX TO FORM 10-Q
Page
Page
PART I.
Item 1.
1
2
3
4
5
6
Item 2.
1413
Item 3.
18
Item 4.
18
PART II.
Item 1.
19
Item 1A.
19
Item 2.
19
Item 3.
19
Item 4.
19
Item 5.
19
Item 6.
20


i



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
HAWKINS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
June 28,
2020		March 29,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$4,510  $4,277  
Trade receivables — less allowance for doubtful accounts:
$530 as of June 28, 2020 and $784 as of March 29, 202069,453  67,391  
Inventories63,389  54,436  
Prepaid expenses and other current assets3,053  4,927  
Total current assets140,405  131,031  
PROPERTY, PLANT, AND EQUIPMENT:271,990  267,221  
Less accumulated depreciation144,929  140,877  
Net property, plant, and equipment127,061  126,344  
OTHER ASSETS:
Right-of-use assets8,755  9,090  
Goodwill58,440  58,440  
Intangible assets, net59,384  60,653  
Other5,417  3,770  
Total other assets131,996  131,953  
Total assets$399,462  $389,328  
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable — trade$31,069  $34,129  
Accrued payroll and employee benefits6,827  13,538  
Income tax payable4,323  59  
Current portion of long-term debt9,907  9,907  
Short-term lease liability1,493  1,523  
Container deposits1,408  1,376  
Other current liabilities1,654  1,688  
Total current liabilities56,681  62,220  
LONG-TERM DEBT, LESS CURRENT PORTION55,775  49,751  
LONG-TERM LEASE LIABILITY7,306  7,649  
PENSION WITHDRAWAL LIABILITY4,892  4,978  
DEFERRED INCOME TAXES25,102  25,106  
OTHER LONG-TERM LIABILITIES6,277  6,140  
Total liabilities156,033  155,844  
COMMITMENTS AND CONTINGENCIES—  —  
SHAREHOLDERS’ EQUITY:
Common stock; authorized: 30,000,000 shares of $0.05 par value; 10,515,835 and 10,512,229 shares issued and outstanding as of June 28, 2020 and March 29, 2020, respectively526  526  
Additional paid-in capital50,736  50,090  
Retained earnings192,256  182,947  
Accumulated other comprehensive loss(89) (79) 
Total shareholders’ equity243,429  233,484  
Total liabilities and shareholders’ equity$399,462  $389,328  

 June 30,
2019		 March 31,
2019
ASSETS 
 
CURRENT ASSETS: 
 
Cash and cash equivalents $5,607
 $9,199
Trade receivables — less allowance for doubtful accounts: 

 

$916 as of June 30, 2019 and $620 as of March 31, 2019 69,026
 63,966
Inventories 58,693
 60,482
Income taxes receivable —
 527
Prepaid expenses and other current assets 4,777
 5,235
Total current assets 138,103
 139,409
PROPERTY, PLANT, AND EQUIPMENT: 253,544
 244,861
Less accumulated depreciation 129,996
 126,233
Net property, plant, and equipment 123,548
 118,628
OTHER ASSETS: 

 

Right-of-use assets 9,941
 —
Goodwill 58,440
 58,440
Intangible assets, net 64,457
 65,726
Other 4,468
 3,396
Total other assets 137,306
 127,562
Total assets $398,957
 $385,599
LIABILITIES AND SHAREHOLDERS’ EQUITY 

 

CURRENT LIABILITIES: 

 

Accounts payable — trade $31,971
 $29,314
Accrued payroll and employee benefits 5,947
 12,483
Income tax payable 2,983
 —
Current portion of long-term debt 9,907
 9,907
Short-term lease liability 1,707
 —
Container deposits 1,362
 1,299
Other current liabilities 1,812
 2,393
Total current liabilities 55,689
 55,396
LONG-TERM DEBT, LESS CURRENT PORTION 74,682
 74,658
LONG-TERM LEASE LIABILITY 8,206
 —
PENSION WITHDRAWAL LIABILITY 5,233
 5,316
DEFERRED INCOME TAXES 26,606
 26,673
OTHER LONG-TERM LIABILITIES 5,149
 5,695
Total liabilities 175,565
 167,738
COMMITMENTS AND CONTINGENCIES —
 —
SHAREHOLDERS’ EQUITY: 
 
Common stock; authorized: 30,000,000 shares of $0.05 par value; 10,563,774 and 10,592,450 shares issued and outstanding as of June 30, 2019 and March 31, 2019, respectively 528
 530
Additional paid-in capital 50,974
 52,609
Retained earnings 171,752
 164,405
Accumulated other comprehensive income 138
 317
Total shareholders’ equity 223,392
 217,861
Total liabilities and shareholders’ equity $398,957
 $385,599

See accompanying notes to condensed consolidated financial statements.

1


HAWKINS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except share and per-share data)
 
 Three Months Ended Three Months Ended
 June 30,
2019		 July 1,
2018		 June 28,
2020		June 30,
2019
Sales $147,336
 $149,800
Sales$143,172  $147,336  
Cost of sales (118,539) (121,343)Cost of sales(112,196) (118,539) 
Gross profit 28,797
 28,457
Gross profit30,976  28,797  
Selling, general and administrative expenses (14,836) (14,979)Selling, general and administrative expenses(15,038) (14,836) 
Operating income 13,961
 13,478
Operating income15,938  13,961  
Interest expense, net (763) (934)Interest expense, net(380) (763) 
Other income (expense) 117
 (2)
Other incomeOther income477  117  
Income before income taxes 13,315
 12,542
Income before income taxes16,035  13,315  
Income tax expense (3,508) (3,419)Income tax expense(4,247) (3,508) 
Net income $9,807
 $9,123
Net income$11,788  $9,807  
    
Weighted average number of shares outstanding - basic 10,604,306
 10,648,226
Weighted average number of shares outstanding - basic10,515,728  10,604,306  
Weighted average number of shares outstanding - diluted 10,665,709
 10,682,060
Weighted average number of shares outstanding - diluted10,642,673  10,665,709  
    
Basic earnings per share $0.92
 $0.86
Basic earnings per share$1.12  $0.92  
Diluted earnings per share $0.92
 $0.85
Diluted earnings per share$1.11  $0.92  
    
Cash dividends declared per common share $0.23
 $—
Cash dividends declared per common share$0.2325  $0.2300  
See accompanying notes to condensed consolidated financial statements.




2

HAWKINS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
 
 Three Months Ended Three Months Ended
 June 30,
2019		 July 1,
2018		 June 28,
2020		June 30,
2019
Net income $9,807
 $9,123
Net income$11,788  $9,807  
Other comprehensive income, net of tax:    
Unrealized (loss) gain on interest rate swap (179) 27
Other comprehensive loss, net of tax:Other comprehensive loss, net of tax:
Unrealized loss on interest rate swapUnrealized loss on interest rate swap(10) (179) 
Total comprehensive income $9,628
 $9,150
Total comprehensive income$11,778  $9,628  
See accompanying notes to condensed consolidated financial statements.




3

HAWKINS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share data)
Common StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated Other Comprehensive Income (Loss)Total
Shareholders’
Equity
SharesAmount
BALANCE — March 29, 2020BALANCE — March 29, 202010,512,229  $526  $50,090  $182,947  $(79) $233,484  
Cash dividends declared and paidCash dividends declared and paid(2,479) (2,479) 
Share-based compensation expenseShare-based compensation expense700  700  
Vesting of restricted stockVesting of restricted stock5,263  —  —  —  
Shares surrendered for payroll taxesShares surrendered for payroll taxes(1,657) —  (54) (54) 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax(10) (10) 
Net incomeNet income11,788  11,788  
BALANCE — June 28, 2020BALANCE — June 28, 202010,515,835  $526  $50,736  $192,256  $(89) $243,429  
 Common Stock 
Additional
Paid-in
Capital
 
Retained
Earnings
 Accumulated Other Comprehensive Income (Loss) 
Total
Shareholders’
Equity
Shares Amount 
BALANCE — April 1, 2018 10,631,992
 $532
 $53,877
 $147,242
 $596
 $202,247
Cash dividends declared 
 
       —
Common StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated Other Comprehensive Income (Loss)Total
Shareholders’
Equity
SharesAmount
BALANCE — March 31, 2019BALANCE — March 31, 201910,592,450  $530  $52,609  $164,405  $317  $217,861  
Cash dividends declared and paidCash dividends declared and paid(2,460) (2,460) 
Share-based compensation expense 
 
 470
     470
Share-based compensation expense509  509  
Vesting of restricted stock 24,567
 1
 (1)     —
Vesting of restricted stock27,620  1  (1) —  
Shares surrendered for payroll taxes (8,105) —
 (265)     (265)Shares surrendered for payroll taxes(9,160) (1) (342) (343) 
ESPP shares issued 22,531
 1
 676
     677
Shares repurchased —
 

       —
Shares repurchased(47,136) (2) (1,801) (1,803) 
Other comprehensive income, net of tax 

 

     27
 27
Net income 

 

   9,123
   9,123
BALANCE — July 1, 2018 10,670,985
 $534
 $54,757
 $156,365
 $623
 $212,279

 

 

       

BALANCE — March 31, 2019 10,592,450
 $530
 $52,609
 $164,405
 $317
 $217,861
Cash dividends declared 
 
   (2,460)   (2,460)
Share-based compensation expense 
 
 509
     509
Vesting of restricted stock 27,620
 1
 (1)     —
Shares surrendered for payroll taxes (9,160) (1) (342)     (343)
Shares repurchased (47,136) (2) (1,801)     (1,803)
Other comprehensive income, net of tax 

 

     (179) (179)
Other comprehensive loss, net of taxOther comprehensive loss, net of tax(179) (179) 
Net income 

 

   9,807
   9,807
Net income9,807  9,807  
BALANCE — June 30, 2019 10,563,774
 $528
 $50,974
 $171,752
 $138
 $223,392
BALANCE — June 30, 201910,563,774  $528  $50,974  $171,752  $138  $223,392  
See accompanying notes to condensed consolidated financial statements.

4



HAWKINS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
 Three Months Ended Three Months Ended
 June 30,
2019		 July 1,
2018		 June 28,
2020		June 30,
2019
CASH FLOWS FROM OPERATING ACTIVITIES:    CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,807
 $9,123
Net income$11,788  $9,807  
Reconciliation to cash flows:    Reconciliation to cash flows:
Depreciation and amortization 5,353
 5,507
Depreciation and amortization5,484  5,353  
Operating leases 69
 —
Operating leases493  515  
Amortization of debt issuance costs 23
 34
Loss (gain) on deferred compensation assets (117) 2
Gain on deferred compensation assetsGain on deferred compensation assets(477) (117) 
Stock compensation expense 509
 470
Stock compensation expense700  509  
Loss on property disposals 6
 78
OtherOther22  29  
Changes in operating accounts providing (using) cash:    Changes in operating accounts providing (using) cash:
Trade receivables (5,044) (4,432)Trade receivables(1,992) (5,044) 
Inventories 1,789
 (6,631)Inventories(8,952) 1,789  
Accounts payable 2,742
 3,536
Accounts payable(2,354) 2,742  
Accrued liabilities (7,667) (3,708)Accrued liabilities(6,689) (7,667) 
Lease liabilitiesLease liabilities(513) (623) 
Income taxes 3,510
 3,419
Income taxes4,263  3,510  
Other (870) (583)Other(220) (693) 
Net cash provided by operating activities 10,110
 6,815
Net cash provided by operating activities1,553  10,110  
CASH FLOWS FROM INVESTING ACTIVITIES:    CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (9,159) (2,371)Purchases of property, plant, and equipment(4,848) (9,159) 
Other 63
 35
Other61  63  
Net cash used in investing activities (9,096) (2,336)Net cash used in investing activities(4,787) (9,096) 
CASH FLOWS FROM FINANCING ACTIVITIES:    CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (2,460) (4,704)
New shares issued —
 677
Cash dividends declared and paidCash dividends declared and paid(2,479) (2,460) 
Shares surrendered for payroll taxes (343) (265)Shares surrendered for payroll taxes(54) (343) 
Shares repurchased (1,803) —
Shares repurchased—  (1,803) 
Net proceeds from revolver borrowings —
 2,500
Net proceeds from revolver borrowings6,000  —  
Payments on term loan borrowings —
 (2,500)
Net cash used in financing activities (4,606) (4,292)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,592) 187
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities3,467  (4,606) 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTSNET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS233  (3,592) 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,199
 4,990
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD4,277  9,199  
CASH AND CASH EQUIVALENTS, END OF PERIOD $5,607
 $5,177
CASH AND CASH EQUIVALENTS, END OF PERIOD$4,510  $5,607  
    
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $756
 $872
Cash paid for interest$288  $756  
Noncash investing activities - capital expenditures in accounts payable $410
 $211
Noncash investing activities - capital expenditures in accounts payable$334  $410  
See accompanying notes to condensed consolidated financial statements.




5

HAWKINS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 1 – Summary of Significant Accounting Policies


Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 201929, 2020, previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. All adjustments made to the interim condensed consolidated financial statements were of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended June 30, 201928, 2020 are not necessarily indicative of the results that may be expected for the full year.


References to fiscal 2019 refer to the fiscal year ended March 31, 2019, and references to fiscal 2020 refer to the fiscal year ended March 29, 2020 and references to fiscal 2021 refer to the fiscal year ending March 29, 2020.28, 2021.


Use of Estimates. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, particularly receivables, inventories, property, plant and equipment, right-of-use assets, goodwill, intangibles, accrued expenses, short-term and long-term lease liability, income taxes and related accounts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Accounting Policies. The accounting policies we follow are set forth in Note 1 – Nature of Business and Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019,29, 2020, previously filed with the SEC. With the exception of our policy regarding leases (see below), thereThere has been no significant change in our accounting policies since the end of fiscal 2019.2020.

Leases.The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets include operating leases. Lease liabilities for operating leases are classified in “short-term lease liabilities” and “long-term lease liabilities” in our condensed consolidated balance sheet.

Operating assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease and non-lease components are generally accounted for separately for real estate leases. For non-real estate leases, we account for the lease and non-lease components as a single lease component.

Recently IssuedAdopted Accounting Pronouncements


In June 2016, the Financial Accounting Standards Board (“FASB”) issuedOn March 30, 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this update replacereplaced the incurred loss impairment methodology in currentprevious GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. This ASU is effective for annual periods and interim periods for those annual periods beginning after December 15, 2019, which for us is our fiscal year beginning March 30, 2020. Entities may early adopt beginning after December 15, 2018. We are currently evaluating the impact of theOur adoption of ASU 2016-13 on our consolidated financial statements.
Recently Adopted Accounting Pronouncements

On April 1, 2019, we adopted ASU 2016-02, which provides new accounting guidance requiring lessees to recognize most leases as assets and liabilities on the balance sheet and disclose key information about leasing arrangements. The new standard establishes a ROU model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases


with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and expense recognition in the income statement. We adopted this ASU using the modified retrospective method. See Note 11impacted our method for calculating and estimating our allowance for doubtful accounts but did not have a material impact to the condensed consolidatedour financial statements for further details.position or results of operations.


Note 2 - Revenue


Our revenue arrangements generally consist of a single performance obligation to transfer promised goods or services. We disaggregate revenues from contracts with customers by both operating segments andas well as types of productproducts sold. Reporting by operating segment is pertinent to understanding our revenues, as it aligns to how we review the financial performance of our operations. Types of products sold within each operating segment help us to further evaluate the financial performance of our segments.



6

The following tables disaggregate external customer net sales by major revenue stream for the three months ended June 28, 2020 and June 30, 20192019:
Three months ended June 28, 2020
(In thousands)IndustrialWater
Treatment		Health and
Nutrition		Total
Bulk / Distributed specialty products (1)
$8,824  $3,875  $25,945  $38,644  
Manufactured, blended or repackaged products (2)
61,842  35,506  6,098  103,446  
Other836  333  (87) 1,082  
Total external customer sales$71,502  $39,714  $31,956  $143,172  
Three months ended June 30, 2019
(In thousands)IndustrialWater
Treatment		Health and
Nutrition		Total
Bulk / Distributed specialty products (1)
$15,013  $4,708  $24,605  $44,326  
Manufactured, blended or repackaged products (2)
59,471  38,150  4,144  101,765  
Other841  394  10  1,245  
Total external customer sales$75,325  $43,252  $28,759  $147,336  

(1)For our Industrial and July 1, 2018:Water Treatment segments, this line includes our bulk products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities. For our Health and Nutrition segment, this line includes our non-manufactured distributed specialty products, which may be sold out of one of our facilities or direct shipped to our customers.
(2)For our Industrial and Water Treatment segments, this line includes our non-bulk specialty products that we either manufacture, blend, repackage, resell in their original form, or direct ship to our customers in smaller quantities, and services we provide for our customers. For our Health and Nutrition segment, this line includes products manufactured, processed or repackaged in our facility and/or with our equipment.
 Three months ended June 30, 2019
(In thousands)Industrial Water
Treatment		 Health and
Nutrition		 Total
Bulk / Distributed specialty products (1)
$15,090
 $4,708
 $24,603
 $44,401
Manufactured, blended or repackaged products (2)
59,394
 38,150
 4,144
 101,688
Other841
 394
 12
 1,247
Total external customer sales$75,325
 $43,252
 $28,759
 $147,336
        
 Three months ended July 1, 2018
(In thousands)Industrial Water
Treatment		 Health and
Nutrition		 Total
Bulk / Distributed specialty products (1)
$14,936
 $5,822
 $30,677
 $51,435
Manufactured, blended or repackaged products (2)
58,032
 34,659
 4,185
 96,876
Other1,050
 388
 51
 1,489
Total external customer sales$74,018
 $40,869
 $34,913
 $149,800


(1)For our Industrial and Water Treatment segments, this line includes our bulk products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities. For our Health and Nutrition segment, this line includes our non-manufactured distributed specialty products, which may be sold out of one of our facilities or direct shipped to our customers.
(2)For our Industrial and Water Treatment segments, this line includes our non-bulk specialty products that we either manufacture, blend, repackage, resell in their original form, or direct ship to our customers in smaller quantities, and services we provide for our customers. For our Health and Nutrition segment, this line includes products manufactured, processed or repackaged in our facility and/or with our equipment.


Net sales include products and shipping charges, net of estimates for product returns and any related sales rebates. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. Our criteria for recording revenue is consistent between our operating segments and types of products sold. We recognize revenue upon transfer of control of the promised products to the customer, with revenue recognized at the point in time the customer obtains control of the products. In arrangements where product is shipped directly from the vendor to our customer, we act as the principal in the transaction as we direct the other party to provide the product to our customer on our behalf, take inventory risk, establish the selling price, and are exposed to credit risk for the collection of the invoiced amount. If there were circumstances where we were to manufacture products for customers that were unique to their specifications and we would be prohibited by contract to use the product for any alternate use, we would recognize revenue over time if all criteria were met. We have made a policy election to treat shipping costs for FOB shipping point sales as fulfillment costs. As such, we recognize revenue for all shipping charges, if applicable, at the same time we recognize revenue on the products delivered. We estimate product returns based on historical return rates. Using probability assessments, we estimate sales rebates expected to be paid over the term of the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. We offer certain customers cash discounts and volume rebates as sales incentives. The discounts and volume rebates are recorded as a reduction


in sales at the time revenue is recognized in an amount estimated based on historical experience and contractual obligations. We periodically review the assumptions underlying our estimates of discounts and volume rebates and adjust revenues accordingly.


Note 3 – Earnings per Share


Basic earnings per share (“EPS”) areis computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted EPS includes the dilutive impact of incremental shares assumed to be issued as performance units and restricted stock.


7

Basic and diluted EPS were calculated using the following:
 Three Months Ended
June 28,
2020		June 30,
2019
Weighted-average common shares outstanding—basic10,515,728  10,604,306  
Dilutive impact of performance units and restricted stock126,945  61,403  
Weighted-average common shares outstanding—diluted10,642,673  10,665,709  
  Three Months Ended
  June 30,
2019		 July 1,
2018
Weighted-average common shares outstanding—basic 10,604,306
 10,648,226
Dilutive impact of performance units and restricted stock 61,403
 33,834
Weighted-average common shares outstanding—diluted 10,665,709
 10,682,060


For each of the three months ended June 30, 2019 and July 1, 2018,periods presented, there were no0 shares excluded from the calculation of weighted-average common shares for diluted EPS.


Note 4 – Derivative Instruments


We have in place an interest rate swap agreement to manage the risk associated with a portion of our variable-rate long-term debt. We do not utilize derivative instruments for speculative purposes. 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 $20 million swap agreement will terminate on December 23, 2020. The notional amount of the swap agreement is currently $30 million through August 31, 2019 and reduces to $20 million from September 1, 2019 through December 23, 2020. We have designated this swap as a cash flow hedge and have determined that it qualifies for hedge accounting treatment. For so long as the hedge is effective, changes in fair value of the cash flow hedge are recorded in other comprehensive income (net of tax) until income or loss from the cash flows of the hedged item is realized.




For the three months ended June 30, 2019,28, 2020, we recorded $0.2 milliona nominal amount in other comprehensive incomeloss related to unrealized losses (net of tax) on the cash flow hedge described above. For the three months ended July 1, 2018,June 30, 2019, we recorded a nominal amount$0.2 million in other comprehensive incomeloss related to unrealized gainslosses (net of tax) on the cash flow hedge. Included in other long-term assetscurrent liabilities on our condensed consolidated balance sheet was $0.2$0.1 million as of June 30, 201928, 2020 and $0.4 million as of March 31, 2019 related to the cash flow hedge.29, 2020. Unrealized gains and losses will be reflected in net income when the related cash flows or hedged transactions occur and offset the related performance of the hedged item.


By their nature, derivative instruments are subject to market risk. Derivative instruments are also subject to credit risk associated with counterparties to the derivative contracts. Credit risk associated with derivatives is measured based on the replacement cost should the counterparty with a contract in a gain position to us fail to perform under the terms of the contract. We do not anticipate nonperformance by the counterparty.


Note 5 – Fair Value Measurements


Our financial assets and liabilities are measured at fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We classify the inputs used to measure fair value into the following hierarchy:
 
Level 1:Quoted prices in active markets for identical assets or liabilities.
Level 2:Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for the asset or liability.
Level 3:Unobservable inputs for the asset or liability that are supported by little or no market activity. These fair values are determined using pricing models for which the assumptions utilize management’s estimates or market participant assumptions.
 




Assets and Liabilities Measured at Fair Value on a Recurring Basis.  The fair value hierarchy requires the use of observable market data when available. In instances where inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
 


Our financial assets that are measured at fair value on a recurring basis are an interest rate swap and assets held in a deferred compensation retirement plan. BothAs of theseJune 28, 2020, the assets held in a deferred compensation retirement plan are classified as other long-term assets on our balance sheet, with the portion of the deferred compensation retirement plan assets expected to be paid within twelve months reclassified toclassified as current assets.assets and the interest rate swap is classified as other current liabilities on our balance sheet. The fair value of the interest rate swap is determined by the respective counterparties based on interest rate changes. Interest rate swaps are valued based on observable interest rate yield curves for similar instruments. The deferred compensation plan
8

assets relate to contributions made to a non-qualified compensation plan established in fiscal 2017, on behalf of certain employees who are classified as “highly compensated employees” as determined by IRS guidelines. The assets are part of a rabbi trust and the funds are held in mutual funds. The fair value of the deferred compensation is based on the quoted market prices for the mutual funds at the end of the period.


 
The following tables summarize the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 201928, 2020 and March 31, 2019.29, 2020.

 0
(In thousands)June 28, 2020March 29, 2020
Assets
Deferred compensation plan assetsLevel 1$5,279  $3,564  
Liabilities
Interest rate swapLevel 2$122  $108  

  June 30, 2019
(In thousands) Level 1 Level 2 Level 3
Interest rate swap —
 $190
 —
Deferred compensation plan assets $4,007
 —
 —

  March 31, 2019
(In thousands) Level 1 Level 2 Level 3
Interest rate swap —
 $435
 —
Deferred compensation plan assets $2,637
 —
 —

Note 6– Assets Held for Sale


In the first quarter of fiscal 2019,2021, management entered into a plan of action to dispose ofdetermined that an office building in St. Louis, Missouri currently utilized in the administration of our Industrial segment. The amount of office space in this facility isthat was previously held for sale no longer needed duemet the criteria to current staffing levels, and management expects to relocate affected employees to leased space. The building is listed for sale atbe classified as such. As a price in excess of its current book value, and thus no impairment has been recognized. Theresult, the $0.9 million net book value was reclassified out of this property is recorded as an asset held for sale within “Prepaid expenses and other current assets” and is now classified as held and used within Property, Plant and Equipment on our balance sheet.


Note 7 – Inventories


Inventories at June 30, 201928, 2020 and March 31, 201929, 2020 consisted of the following:
June 28,
2020		March 29,
2020
(In thousands)
Inventory (FIFO basis)$69,116  $60,090  
LIFO reserve(5,727) (5,654) 
Net inventory$63,389  $54,436  
  June 30,
2019		 March 31,
2019
(In thousands)  
Inventory (FIFO basis) $63,749
 $65,526
LIFO reserve (5,056) (5,044)
Net inventory $58,693
 $60,482


The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $43.8$46.7 million at June 30, 201928, 2020 and $45.2$43.3 million at March 31, 2019.29, 2020. The remainder of the inventory was valued and accounted for under the FIFO method.

The LIFO reserve increased nominally during the three months ended June 30, 2019 and increased $0.3 million during the three months ended July 1, 2018. The valuation of LIFO inventory for interim periods is based on our estimates of year-end inventory levels and costs.


Note 8 – Goodwill and Intangible Assets


The carrying amount of goodwill was $58.4 million as of June 30, 201928, 2020 and March 31, 2019,29, 2020, of which $44.9 million was related to our Health and Nutrition segment, $7.0 million was related to our Water Treatment segment, and $6.5 million was related to our Industrial segment.


A summary of our intangible assets as of June 30, 201928, 2020 and March 31, 201929, 2020 is as follows:
 June 28, 2020March 29, 2020
(In thousands)Gross
Amount		Accumulated
Amortization		NetGross 
Amount		Accumulated
Amortization		Net
Finite-life intangible assets
Customer relationships$78,383  $(22,523) $55,860  $78,383  $(21,400) $56,983  
Trademarks and trade names6,045  (3,772) 2,273  6,045  (3,640) 2,405  
Other finite-life intangible assets3,648  (3,624) 24  3,648  (3,610) 38  
Total finite-life intangible assets88,076  (29,919) 58,157  88,076  (28,650) 59,426  
Indefinite-life intangible assets1,227  —  1,227  1,227  —  1,227  
Total intangible assets$89,303  $(29,919) $59,384  $89,303  $(28,650) $60,653  


  June 30, 2019 March 31, 2019
(In thousands) 
Gross
Amount
 
Accumulated
Amortization
 Net 
Gross 
Amount
 
Accumulated
Amortization
 Net
Finite-life intangible assets            
Customer relationships $78,383
 $(18,032) $60,351
 $78,383
 $(16,910) $61,473
Trademarks and trade names 6,045
 (3,247) 2,798
 6,045
 (3,115) 2,930
Other finite-life intangible assets 3,648
 (3,567) 81
 3,648
 (3,552) 96
Total finite-life intangible assets 88,076
 (24,846) 63,230
 88,076
 (23,577) 64,499
Indefinite-life intangible assets 1,227
 —
 1,227
 1,227
 —
 1,227
Total intangible assets $89,303
 $(24,846) $64,457
 $89,303
 $(23,577) $65,726

9


Note 9 – Debt


Debt at June 30, 201928, 2020 and March 31, 201929, 2020 consisted of the following:
June 28,
2020		March 29,
2020
(In thousands)
Senior secured revolving loan$66,000  $60,000  
Less: unamortized debt issuance costs(318) (342) 
Total debt, net of debt issuance costs65,682  59,658  
Less: current portion of long-term debt(9,907) (9,907) 
Total long-term debt$55,775  $49,751  
  June 30,
2019		 March 31,
2019
   
(In thousands)    
Senior secured revolving loan $85,000
 $85,000
Less: unamortized debt issuance costs (411) (435)
Total debt, net of debt issuance costs 84,589
 84,565
Less: current portion of long-term debt (9,907) (9,907)
Total long-term debt $74,682
 $74,658


Note 10 – Income Taxes


We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The tax years prior to our fiscal year ended April 3, 2016 are closed to examination by the Internal Revenue Service, and with few exceptions, state and local
income tax jurisdictions. Our effective tax rate for the three months ended June 30, 201928, 2020 was 26.3%26.5% and was 27.3%26.3% for the three months ended July 1, 2018.June 30, 2019. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.

As of June 30, 2019 and March 31, 2019, our balance sheet included a long-term liability for uncertain tax positions of $0.1 million, which arose from tax positions taken by Stauber Performance Ingredients, Inc. (“Stauber”) on its tax returns for periods prior to our acquisition. Because the Stauber acquisition agreement provides us with indemnification by the prior owners for any tax liabilities relating to pre-acquisition tax returns, we have also recorded an offsetting, long-term receivable of $0.1 million as of June 30, 2019 and March 31, 2019. As a result, any change in the unrecognized tax benefit will not impact our effective tax rate in future periods. We expect these uncertain income tax amounts to decrease through September 2019 as the applicable examination periods for the relevant taxing authorities expire.


Note 11 – Leases


Adoption of ASU 2016-02, Leases. On April 1, 2019, we adopted ASU 2016-02 using the modified retrospective method applied to existing leases in place as of April 1, 2019. Leases entered into after April 1, 2019 are presented under the provisions of ASU 2016-02, while prior periods are not adjusted and continue to be reported in accordance with previous accounting guidance. Leases commencing or renewing after the adoption date are evaluated based on the guidance in ASU 2016-02 and may result in more finance leases being recognized even for the renewal of previously classified operating leases.



We elected to adopt the ‘package of practical expedients’, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the short-term lease recognition exemption for all leases that qualified. This means, for those leases that qualified, we did not recognize right-of-use assets or lease liabilities, and this included not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all leases other than leases of real estate, and this included not separating lease and non-lease components for all leases other than leases of real estate in transition.

We adopted ASU 2016-02 using the modified retrospective method, recognizing the cumulative effect of application as an adjustment to the opening balance sheet. The standard had a material impact on our condensed consolidated balance sheet, but did not have a material impact on our condensed consolidated statement of income or cash flows. The most significant impact was the recognition of the ROU asset and lease liabilities for operating leases, both of which were approximately $10.4 million upon adoption.

Lease Obligations. As of June 30, 2019,28, 2020, we were obligated under operating lease agreements for certain manufacturing facilities, warehouse space, the land on which some of our facilities sit, vehicles and information technology equipment. Our leases have remaining lease terms of 1 year to 2524 years, some of which may include options to extend the lease for up to 10 years.


As of June 30, 2019,28, 2020, our operating lease components with initial or remaining terms in excess of one year were classified on the condensed consolidated balance sheet within right of use assets, short-term lease liability and long-term lease liability.


Expense for leases less than 12 months for the three months ended June 30, 201928, 2020 was not0t material. Total lease expense was $0.7 million for the three months ended June 28, 2020 and June 30, 2019 was $0.7 million.2019.


Other information related to our operating leases was as follows:
June 28, 2020
Lease Term and Discount Rate
Weighted average remaining lease term (years)8.67
Weighted average discount rate4.0 %
(In thousands) June 30, 2019
Supplemental Cash Flow Information  
Operating cash flows from leases $69
Lease Term and Discount Rate  
Weighted average remaining lease term (years) 9.15
Weighted average discount rate 4.1%



Maturities of lease liabilities as of June 30, 201928, 2020 were as follows:
(In thousands)Operating Leases
Remaining fiscal 2021$1,727 
Fiscal 20221,547 
Fiscal 20231,297 
Fiscal 20241,119 
Fiscal 20251,126 
Thereafter3,838 
Total$10,654 
Less: Interest(1,855)
Present value of lease liabilities$8,799 


(In thousands) Operating Leases
Remaining fiscal 2020 $1,978
Fiscal 2021 1,583
Fiscal 2022 1,306
Fiscal 2023 1,176
Fiscal 2024 1,114
Thereafter 4,959
Total $12,116
Less: Interest (2,203)
Present value of lease liabilities $9,913








As we have not restated prior year information for our adoption of ASC Topic 842, the following represents our future minimum lease payments for operating leases under ASC Topic 840 on March 31, 2019:
10
(In thousands) Operating Leases
Fiscal 2020 $2,198
Fiscal 2021 1,783
Fiscal 2022 1,407
Fiscal 2023 1,352
Fiscal 2024 1,183
Thereafter 5,473
Total $13,396



Note 12 – Share-Based Compensation


Performance-Based Restricted Stock Units. Our Board of Directors (the “Board”) approved a performance-based equity compensation arrangement for our executive officers during the first quarters of each of fiscal 20202021 and fiscal 2019.2020. These performance-based arrangements provide for the grant of performance-based restricted stock units that represent a possible future issuance of restricted shares of our common stock based on a pre-tax income target for the applicable fiscal year. The actual number of restricted shares to be issued to each executive officer is determined when our final financial information becomes available after the applicable fiscal year and will be between zero0 shares and 69,63262,385 shares in the aggregate for fiscal 2020.2021. The restricted shares issued, if any, will fully vest approximately two years after the last day of the fiscal year on which the performance is based. We are recording the compensation expense for the outstanding performance share units and the converted restricted stock over the life of the awards.


The following table represents the restricted stock activity for the three months ended June 30, 2019:28, 2020:
SharesWeighted-
Average Grant
Date Fair Value
Unvested at beginning of period74,515  $34.27  
Granted64,813  37.37  
Vested(5,263) 31.35  
Unvested at end of period134,065  $35.88  
  Shares 
Weighted-
Average Grant
Date Fair Value
Unvested at beginning of period 32,883
 $43.66
Granted 69,252
 34.49
Vested (27,620) 46.01
Unvested at end of period 74,515
 $34.27


We recorded compensation expense related to performance share units and restricted stock of $0.3$0.5 million for boththe three months ended June 28, 2020 and $0.3 million the three months ended June 30, 2019 and July 1, 2018.2019. Substantially all of the compensation expense was recorded in selling, general and administrative expenses in the condensed consolidated statements of income.


Restricted Stock Awards. As part of their retainer,retainers, each non-employee director who is not an executive officer receives an annual grant of restricted stock for their Board of Director services.service on our Board. The restricted stock awards are expensed over the requisite vesting period, which is one year from the date of issuance, based on the market value on the date of grant. As of June 30, 2019,28, 2020, there were 8,3528,008 shares of restricted stock with a grant date fair value of $35.90$43.67 outstanding under this program. Compensation expense for both the three months ended June 28, 2020 and June 30, 2019 and July 1, 2018 related to restricted stock awards to the Board was $0.1 million.


Note 13 – Share Repurchase Program


Our board of directorsBoard has authorized the repurchase of up to 800,000 shares of our outstanding common stock for cash on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. Upon purchase of the shares, we reduce our common stock for the par value of the shares with the excess applied against additional paid-in capital. During the three months ended June 28, 2020, 0 shares were repurchased. During the three months ended June 30, 2019, we repurchased 47,136 shares at an aggregate purchase price of $1.8 million. No shares were repurchased during the first three months of fiscal 2019. As of June 30, 2019, 457,24428, 2020, 358,797 shares remained available to be repurchased under the share repurchase program.




Note 14 – Litigation, Commitments and Contingencies


Litigation. 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. Legal fees associated with such matters are expensed as incurred.


Environmental Remediation. During fiscal 2018, we recorded a liability of $0.6 million related to estimated remediation expenses associated with existing trichloroethylene contamination at our Minneapolis facility. The liability was $0.3decreased to $0.1 million as of June 30, 201928, 2020 and $0.4 millionMarch 29, 2020, to reflect payments made and management’s revised expectations related to the cost of this environmental remediation. The liability is not discounted as of March 31, 2019.management expects to incur these expenses within the next twelve months. Given the many uncertainties involved in assessing environmental claims, our reserves may prove to be insufficient. While it is possible that additional expenses related to remediation will be incurred in future periods if currently unknown issues arise, we are unable to estimate the extent of any further financial impact at this time.impact.


Note 15 – Segment Information


We have three3 reportable segments: Industrial, Water Treatment, and Health and Nutrition. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in our fiscal 2019 Annual Report on Form 10-K.10-K for the fiscal year ended March 29, 2020.

11


We evaluate performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses. Reportable segments are defined primarily by product and type of customer. Segments are responsible for the sales, marketing and development of their products and services. Other than our Health and Nutrition segment, the segments do not have separate accounting, administration, customer service or purchasing functions. We allocate certain corporate expenses to our operating segments. There are no intersegment sales and no0 operating segments have been aggregated. No single customer’s revenues amounted to 10% or more of our total revenue. Sales are primarily within the United States and all assets are located within the United States.
 
(In thousands) Industrial 
Water
Treatment
 Health and Nutrition Total(In thousands)IndustrialWater
Treatment		Health and NutritionTotal
Three months ended June 28, 2020:Three months ended June 28, 2020:
SalesSales$71,502  $39,714  $31,956  $143,172  
Gross profitGross profit12,457  11,339  7,180  30,976  
Selling, general, and administrative expensesSelling, general, and administrative expenses6,067  5,293  3,678  15,038  
Operating incomeOperating income6,390  6,046  3,502  15,938  
Three months ended June 30, 2019:        Three months ended June 30, 2019:
Sales $75,325
 $43,252
 $28,759
 $147,336
Sales$75,325  $43,252  $28,759  $147,336  
Gross profit 10,915
 12,091
 5,791
 28,797
Gross profit10,915  12,091  5,791  28,797  
Selling, general, and administrative expenses 6,096
 4,988
 3,752
 14,836
Selling, general, and administrative expenses6,096  4,988  3,752  14,836  
Operating income 4,819
 7,103
 2,039
 13,961
Operating income4,819  7,103  2,039  13,961  
Three months ended July 1, 2018: 
 
    
Sales $74,018
 $40,869
 $34,913
 $149,800
Gross profit 10,443
 11,437
 6,577
 28,457
Selling, general, and administrative expenses 5,487
 5,101
 4,391
 14,979
Operating income 4,956
 6,336
 2,186
 13,478


No significant changes to identifiable assets by segment occurred during the three months ended June 30, 2019.

28, 2020.


Note 16 – Subsequent Events

On July 28, 2020, we acquired substantially all the assets of American Development Corporation of Tennessee, Inc. (“ADC”) for $25 million under the terms of an asset purchase agreement among us, ADC and the ADC shareholders. ADC is a water treatment chemical distribution company focused largely in Tennessee, Georgia and Kentucky. The results of operations and the assets, including the goodwill associated with this acquisition, will be included as part of our Water Treatment segment from the date of acquisition forward. The purchase accounting for this acquisition has not yet been completed.
12

ITEM 2.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following is a discussion and analysis of our financial condition and results of operations for the three months ended June 30, 201928, 2020 as compared to the similar period ended July 1, 2018.June 30, 2019. This discussion should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in this quarterly report on Form 10-Q and Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 (“fiscal 2019”). References to “fiscal 2020” refer to the fiscal year ending March 29, 2020.2020.
Overview
We derive substantially all of our revenues from the sale of chemicals and specialty ingredients to our customers in a wide variety of industries. We began our operations primarily as a distributor of bulk chemicals with a strong customer focus. Over the years, we have maintained the strong customer focus and have expanded our business by increasing our sales of value-added chemicalchemicals and specialty ingredients, including manufacturing, blending, and repackaging certain products.


Statement on COVID-19

The pandemic caused by COVID-19 has resulted in federal, state and local governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions or bans, business curtailments, school closures, and other protective measures. While some areas of the country have begun to open up and ease these restrictions, many still have these restrictions in place or are implementing or contemplating new restrictions. Restrictions will likely remain in place for some time. Financial markets have been volatile in 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic.

All of our manufacturing facilities qualify as essential operations (or the equivalent) under applicable federal and state orders. As a result, all of our manufacturing sites and facilities have continued to operate and are doing so safely, with no significant impact to output levels. We are enforcing social distancing and enhanced health, safety and sanitization measures in accordance with guidelines from the Center for Disease Control. We have also implemented necessary procedures and support to enable a significant portion of our office personnel to work remotely.

During this public health crisis, we remain focused on the health and safety of our employees, customers and suppliers and maintaining safe and reliable operations of our manufacturing sites. As our operations and products are essential to critical national infrastructure, it is imperative that we continue to supply materials including the products needed to maintain safe drinking water, ingredients essential for large-scale food, pharmaceutical and other health product manufacturing and nutrition products needed to support our critical infrastructure. Our manufacturing sites have continued to operate during the COVID-19 pandemic, with no significant impact to manufacturing.

We ended the first quarter of fiscal 2021 with a leverage ratio below 1.0x, net debt of $61.5 million and significant amounts available for borrowing under our Revolving Loan Facility.

The COVID-19 pandemic has created tremendous uncertainty in the economy. The financial impact to our company has been mixed, as sales to certain end-markets such as food, bottled bleach and health and nutrition have benefited our reporting segments, while decreased sales to other end-markets such as ethanol, pools and resorts have negatively impacted them. As uncertainty continues with this pandemic, we expect mixed results to continue for the foreseeable future. We will continue to be cautious in our capital expenditures and investments, and delay investments where deemed appropriate, while still investing for the future by opening new Water Treatment branches and making capital investments to drive higher margin business. With our current debt levels and available borrowings, we believe we are well-positioned to weather a continued economic downturn.

Financial Results


We focus on total profitability dollars when evaluating our financial results as opposed to profitability as a percentage of sales, as sales dollars tend to fluctuate, particularly in our Industrial and Water Treatment segments, as raw material costs rise and fall. The costs for certain of our raw materials can rise or fall rapidly, causing fluctuations in gross profit as a percentage of sales.


We use the last in, first out (“LIFO”)LIFO method for valuing the majority of our inventory in our Industrial and Water Treatment segments, which causes the most recent product costs for those products to be recognized in our income statement. The valuation of LIFO inventory for interim periods is based on our estimates of fiscal year-end inventory levels and costs. The LIFO inventory valuation method and the resulting cost of sales are consistent with our business practices of pricing to current chemical raw material prices. Inventories in the Health and Nutrition segment are valued using the first-in, first-out (“FIFO”)FIFO method.


Our Industrial and Water Treatment segments sell bulk commodity products.
13

We disclose the sales of our bulk commodity products as a percentage of total sales dollars within each of thosefor our Industrial and Water Treatment segments. Our definition of bulk commodity products includes products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities. We review our sales reporting on a periodic basis to ensure we are including all products that meet this definition.


Results of Operations
The following table sets forth the percentage relationship of certain items to sales for the period indicated:
 
 Three Months Ended
June 28, 2020June 30, 2019
Sales100.0 %100.0 %
Cost of sales(78.4)%(80.5)%
Gross profit21.6 %19.5 %
Selling, general and administrative expenses(10.5)%(10.1)%
Operating income11.1 %9.4 %
Interest expense, net(0.3)%(0.5)%
Other income0.3 %0.1 %
Income before income taxes11.1 %9.0 %
Income tax expense(3.0)%(2.4)%
Net income8.1 %6.6 %
  Three months ended
  June 30, 2019 July 1, 2018
Sales 100.0 % 100.0 %
Cost of sales (80.5)% (81.0)%
Gross profit 19.5 % 19.0 %
Selling, general and administrative expenses (10.1)% (10.0)%
Operating income 9.4 % 9.0 %
Interest expense, net (0.5)% (0.6)%
Other income (expense) 0.1 % — %
Income before income taxes 9.0 % 8.4 %
Income tax expense (2.4)% (2.3)%
Net income 6.6 % 6.1 %





Three Months Ended June 30, 201928, 2020 Compared to Three Months Ended July 1, 2018June 30, 2019
Sales
Sales decreased $2.5 million, or 1.6%, to $147.3were $143.2 million for the three months ended June 30, 2019, as compared to $149.8current quarter, a decrease of $4.1 million, or 2.8%, from sales of $147.3 million for the same period of the prior year.a year ago.
Industrial Segment. Industrial segment sales increased $1.3decreased $3.8 million, or 1.8%5.1%, to $75.3$71.5 million for the three months ended June 30, 2019,current quarter, as compared to $74.0$75.3 million for the same period of the prior year. Sales of bulk commodity products in the Industrial segment were approximately 20%12% of sales dollars for bothin the three months ended June 30, 2019current quarter and for20% in the same period inof the prior year. SalesThe decrease in sales dollars increased from the prior year due to anwas driven primarily by a temporary increase in overall sales volumes, primarily volumes of our specialty products. The increased sales volumes of bulk and specialty products was partiallyin the first quarter last year attributable to heavy rains and flooding along the Mississippi River, which increased demand from certain customers.customers in that quarter. Sales also decreased in the current quarter as a result of weak economic conditions in the ethanol industry, which decreased sales of products into that industry. The decrease was somewhat offset by increased sales of certain of our manufactured, blended and re-packaged products, largely our bottled bleach products as a result of increased demand due to COVID-19, as well as increased sales of certain pharmaceutical, food ingredients and agricultural products.
Water Treatment Segment. Water Treatment segment sales increased $2.4decreased $3.6 million, or 5.8%8.2%, to $43.3$39.7 million for the three months ended June 30, 2019,current quarter, as compared to $40.9$43.3 million for the same period of the prior year. Sales of bulk commodity products in the Water Treatment segment were approximately 11%10% of sales dollars for the three months ended June 30, 2019current quarter and 14% of sales dollars for the same period in the prior year.11% a year ago. The increasedecrease in sales dollars was driven by increaseddecreased volumes sold in the current quarter due, in part, to customers filling up their tanks in March as a result of supply concerns resulting from COVID-19, which decreased their needs in the current quarter, as well as reduced sales to certain specialty products that carry higher per-unit selling prices.end-markets as a result of COVID-19.
Health & Nutrition Segment. Sales for our Health and Nutrition segment sales decreased $6.2increased $3.2 million, or 17.6%11.1%, to $32.0 million for the current quarter, as compared to $28.8 million for the three months ended June 30, 2019, as compared to $34.9 million the same period of the prior year. The decreaseincrease in sales was driven by decreasedincreased sales of certainboth our manufactured and specialty distributed products. The majorityproducts, partially as a result of the decrease was due to a previously anticipated temporary worldwide supply shortage of a significant product and the ramp-up of sales with new partners replacing previous product lines.increased demand resulting from COVID-19.
Gross Profit
Gross profit wasincreased $2.2 million to $31.0 million, or 21.6% of sales, for the current quarter, from $28.8 million, or 19.5% of sales, for the three months ended June 30, 2019, an increase of $0.3 million from $28.5 million, or 19.0% of sales, for the same period of the prior year. During the three months ended June 30, 2019, the LIFO reserve did not change and, therefore, did not impact gross profit. In the same period of the prior year, the LIFO reserve increased, and gross profit decreased, by $0.3 million.
Industrial Segment. Gross profit for the Industrial segment increased $0.5 million to $10.9 million, or 14.5% of sales, for the three months ended June 30, 2019, as compared to $10.4 million, or 14.1% of sales, for the same period of the prior year. During the current quarter,and prior year quarters, the LIFO reserve did not change and, therefore, did nothad a nominal impact on gross profit. In
Industrial Segment. Gross profit for the Industrial segment increased $1.6 million to $12.5 million, or 17.4% of sales, for the current quarter, from $10.9 million, or 14.5% of sales, for the same period aof the prior year. During the current and prior year ago,
14

quarters, the LIFO reserve increased, andhad a nominal impact on gross profit decreased, by $0.3 million. Totalprofit. Industrial segment gross profit increased from a year ago due to the increase ina favorable product mix shift to more sales as well as decreased operational costs.of our manufactured, blended and re-packaged products.
Water Treatment Segment. Gross profit for the Water Treatment segment increased $0.7decreased $0.8 million to $12.1$11.3 million, or 28.0%28.6% of sales, for the three months ended June 30, 2019, as compared to $11.4current quarter, from $12.1 million, or 28.0% of sales, for the same period of the prior year. During the current and prior year quarters, the LIFO reserve did not change and, therefore, did nothad a nominal impact on gross profit. Gross profit increaseddecreased as a result of higher sales compared to a year ago, offset somewhat by higher operating costs.decreased sales.
Health and Nutrition Segment. Gross profit for our Health and Nutrition segment decreased $0.8increased $1.4 million to $7.2 million, or 22.5% of sales, for the current quarter, from $5.8 million, or 20.1% of sales, for the three months ended June 30, 2019, as compared to $6.6 million, or 18.8% of sales, for the same period of the prior year. GrossThe increase in gross profit decreased aswas a result of lower sales.higher sales compared to the prior year.
Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses wereincreased $0.2 million to $15.0 million, or 10.5% of sales, for the current quarter, compared to $14.8 million, or 10.1% of sales, for the three months ended June 30, 2019, a decrease of $0.2 million from $15.0 million, or 10.0% of sales, for the same period of the prior year. The increase includes a year-over-year increase in compensation expense of $0.4 million related to our non-qualified deferred compensation plan, which is offset by other income.
Operating Income
Operating income increased $0.5$1.9 million to $15.9 million, or 11.1% of sales, for the current quarter, from $14.0 million, or 9.4% of sales, for the three months ended June 30, 2019, as compared to $13.5 million, or 9.0% of sales, for the same period of the prior year due to the combined impact of the factors discussed above.
Interest Expense, Net
Interest expense was $0.8decreased $0.4 million to $0.4 million for the three months ended June 30, 2019 compared to $0.9current quarter, from $0.8 million for the same period of the prior year. Interest expense decreased due to lower outstanding borrowings and lower borrowing rates compared to the prior year.


Other Income
Other (expense) income
Other income wasincreased $0.4 million to $0.5 million recorded for the current quarter, compared to $0.1 million forin the three months ended June 30, 2019, an increasesame period of $0.1 million compared to nominal other expense for the first quarter of last fiscalprior year. Other (expense) incomeThis represents gains or losses recorded on investments held for our non-qualified deferred compensation plan. The amount recorded as a gain or loss iswas offset by a similar reduction orthe same amount recorded as an increase to compensation expense recorded within SG&A expenses.
Income Tax Provision


Our effective income tax rate was 26.3%26.5% for the three months ended June 30, 2019. Our effective tax rate forcurrent quarter, compared to 26.3% in the three months ended July 1, 2018 was 27.3%.same period of the prior year. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.
Liquidity and Capital Resources
Cash was $5.6$4.5 million at June 30, 2019, a decrease28, 2020, an increase of $3.6$0.2 million as compared with the $9.2$4.3 million available as of March 31, 2019.29, 2020.
Cash provided by operating activities was $10.1$1.6 million for the three months ended June 30, 2019,28, 2020, compared to cash provided by operating activities of $6.8$10.1 million for the same period of the prior year. The year-over-year increasedecrease in cash provided by operating activities was primarily driven by the changean increase in inventories, with total inventory decreasingand decreased payables, partially offset by an increase in customer receivables and improvement in net income for the first quarterthree months of fiscal 2020 compared to the same period a large increase in the first quarter of fiscal 2019. Due to flooding along the Mississippi River in the first quarter of fiscal 2020, we were only able to receive a limited number of barges of bulk chemicals into inventory, and thus our total inventory levels declined. In the first quarter of the prior year we were able to receive a larger number of barges.ago. Due to the nature of our operations, which includes purchases of large quantities of bulk chemicals, timing of purchases can result in significant changes in working capital investment and the resulting operating cash flow. Due to flooding in the first quarter of the prior year, we were not able to receive any barges of bulk chemicals into inventory and as a result our inventory levels were unusually low at that time. Typically, our cash requirements increase during the period from April through November as caustic soda inventory levels increase asbecause we receive the majority of barges are received during this period.
Cash used in investing activities was $9.1$4.8 million for the three months ended June 30, 2019,28, 2020, compared to $2.3$9.1 million for the same period of the prior year. Capital expenditures were $9.2$4.8 million for the three months ended June 30, 2019,28, 2020, compared to $2.4$9.2 million in the same period of the prior year. WeIn the first three months of the prior year, we purchased our previously leased corporate headquarters facility for $6.4 million, which was partially offset by increased investments in facility improvements and new and replacement equipment during the first quarterthree months of the current fiscal year, which drove the increase in capital spending.year.

15

Cash used inprovided by financing activities was $4.6$3.5 million for the three months ended June 30, 2019,28, 2020, compared to $4.6 million of cash provided byused in financing activities of $4.3 million in the same period of the prior year. Included in financing activities in the first three months of the current year were dividend paymentsnet debt proceeds of $2.5$6.0 million, and share repurchases of $1.8 million. Incompared to no borrowings in the first three months of the prior year, as our working capital needs were lower at that time because we made dividend paymentsdid not receive any barges of $4.7 million. The year-over-year changebulk chemicals into inventory in dividend payments resulted from changing from semi-annual dividends previouslythat quarter. In addition, we repurchased no shares of our common stock in the first quarter of the current fiscal year, compared to quarterly payments made currently.$1.8 million in the same quarter in the prior year.


We expect our cash balances and funds available under our credit facility, discussed below, along with cash flows generated from operations, will be sufficient to fund the cash requirements of our ongoing operations for the foreseeable future.


Our Board of Directors has authorized the repurchase of up to 800,000 shares of our outstanding common stock, including an increase of 500,000 shares in February 2019.stock. The shares may be purchased on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The primary objective of the share repurchase program is to offset the impact of dilution from issuances relating to employee and director equity grants and our employee stock purchase program. During the first quarterthree months of fiscal 2020,2021, we did not repurchase any shares of common stock. In the first three months of the prior fiscal year, we repurchased 47,136 shares of common stock with an aggregate purchase price of $1.8 million. No shares were repurchased during the first quarter of fiscal 2019. As of June 30, 2019, 457,24428, 2020, 358,797 shares remained available for purchase under the program


We are party to an amended and restated credit agreement (the “Credit Agreement”) with U.S. Bank National Association (“U.S. Bank”) as Sole Lead Arranger and Sole Book Runner, and other lenders from time to time party thereto (collectively, the “Lenders”), whereby U.S. Bank is also serving as Administrative Agent. The Credit Agreement provides us with senior secured revolving credit facilities (the “Revolving Loan Facility”) totaling $150.0 million. The Revolving Loan Facility includes a $5.0 million letter of credit subfacility and $15.0 million swingline subfacility. The Revolving Loan Facility has a five-year maturity date, maturing on November 30, 2023. The Revolving Loan Facility is secured by substantially all of our personal property assets and those of our subsidiaries.




Borrowings under the Revolving Loan Facility bear interest at a rate per annum equal to one of the following, plus, in both cases, an applicable margin based upon our leverage ratio: (a) LIBOR for an interest period of one, two, three or six months as selected by us, reset at the end of the selected interest period, or (b) a base rate determined by reference to the highest of (1) U. S. Bank’s prime rate, (2) the Federal Funds Effective Rate plus 0.5%, or (3) one-month LIBOR for U.S. dollars plus 1.0%. The LIBOR margin is between 0.85% - 1.35%, depending on our leverage ratio. The base rate margin is between 0.00% - 0.35%, depending on our leverage ratio. In the event that the ICE Benchmark Administration (or any person that takes over administration of such rate) determines that LIBOR is no longer available, including as a result of the intended phase out of LIBOR by the end of 2021, our Revolving Loan Facility provides for an alternative rate of interest to be jointly determined by us and U.S. Bank, as administrative agent, that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States. Once such successor rate has been approved by us and U.S. Bank, the Revolving Credit Loan Facility would be amended to use such successor rate without any further action or consent of any other lender, so long as the administrative agent does not receive any objection from any other lender. At June 30, 2019,28, 2020, the effective interest rate on our borrowing was 3.1% 1.5%.


In addition to paying interest on the outstanding principal under the Revolving Loan Facility, we are required to pay a commitment fee on the unutilized commitments thereunder. The commitment fee is between 0.15% - 0.25%, depending on our leverage ratio.


Debt issuance costs paid to the lendersLenders are being amortized as interest expense over the term of the Credit Agreement. As of June 30, 2019,28, 2020, the unamortized balance of these costs was $0.4$0.3 million, and is reflected as a reduction of debt on our balance sheet.


The Credit Agreement requires us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to 1.0. The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict our ability to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions, grant liens on our assets or rate management transactions, subject to certain limitations. We are permitted to make distributions, pay dividends and repurchase shares so long as no default or event of default exists or would exist as a result thereof. We were in compliance with all covenants of the Credit Agreement as of June 30, 2019.28, 2020.


The Credit Agreement contains customary events of default, including failure to comply with covenants in the Credit Agreement and other loan documents, cross default to other material indebtedness, failure by us to pay or discharge material judgments, bankruptcy, and change of control. The occurrence of an event of default would permit the lendersLenders to terminate their commitments and accelerate loans under the CreditRevolving Loan Facility.
16

As part of our growth strategy, we have acquired businesses and may pursue acquisitions or other strategic relationships in the future that we believe will complement or expand our existing businesses or increase our customer base. We believe we could borrow additional funds under our current or new credit facilities or sell equity for strategic reasons or to further strengthen our financial position.

Critical Accounting Estimates
There were no material changes in our critical accounting estimates since the filing of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.29, 2020.
Forward-Looking Statements
The information presented in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs and assumptions. Words such as “anticipate,” “believe,” “estimate,”, “expect,” “intend,” “plan,” “believe,” “estimate,” “will” and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. These factors could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Additional information concerning potential factors that could affect future financial results is included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.29, 2020. We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this Quarterly Report on Form 10-Q. We are not obligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.


17



ITEM 3.  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 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 limited to borrowings under our CreditRevolving Loan Facility. A 25-basis point change in interest rates would potentially increase or decrease our annual interest expense by approximately $0.1 million. We have in place an interest rate swap that converts a portion of our variable-rate debt into a fixed-rate obligation. The swap agreement began September 1, 2017 and will end on December 23, 2020. The notional amount of the swap agreement is currently $30$20 million through August 31, 2019 and reduces to $20 million from September 1, 2019 through December 23, 2020.its end date. We have designated this swap as a cash flow hedge and have determined that it qualifies for hedge accounting treatment. Changes in fair value of the cash flow hedge are recorded in other comprehensive loss (net of tax) until income or loss from the cash flows of the hedged item is realized.


Other types of market risk, such as foreign currency risk, do not arise in the normal course of our business activities.


ITEM 4.  CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2019.28, 2020. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control
There was no change in our internal control over financial reporting during the first quarter of fiscal 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

18


PART II. OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
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.
 
ITEM 1A. RISK FACTORS
There have been no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.29, 2020.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


OurAs previously announced, our Board of Directors has authorized the repurchase of up to 800,000 shares of our outstanding common stock. The shares may be purchased on the open market or in privately negotiated transactions subject to applicable securities laws and regulations. The following table sets forth information concerning purchases of our common stock for the three months ended June 30, 2019:28, 2020:


Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program Maximum Number of Shares that May Yet be Purchased under Plans or Programs
4/1/2019 - 4/28/2019 9,160
(1)$37.49
 —
 504,380
4/29/2019 - 5/26/2019 —
 —
 —
 504,380
5/27/2019 - 6/30/2019 47,136
 $38.29
 47,136
 457,244
         Total 56,296
   47,136
  

PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of a Publicly Announced Plan or ProgramMaximum Number of Shares that May Yet be Purchased under Plans or Programs
03/30/2020-04/26/20201,657  (1)$32.69  —  358,797  
04/27/2020-05/24/2020—  —  —  358,797  
05/25/2020-06/28/2020—  —  —  358,797  
         Total1,657  —  
(1) The shares of common stock in this row represent shares that were surrendered to us by stock plan participants in order to satisfy minimum withholding tax obligations related to the vesting of restricted stock awards and are not shares purchased under the Board of Directors authorization described above.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4.  MINE SAFETY DISCLOSURES


Not Applicable.


ITEM 5.  OTHER INFORMATION


None.




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ITEM 6.  EXHIBITS


Exhibit
DescriptionDescriptionMethod of Filing
3.1
Incorporated by Reference
3.2
Incorporated by Reference
10.1
Employee Stock Purchase Plan, as amended. (3)
Incorporated by Reference
10.2
Amended and Restated Credit Agreement, dated as of November 30, 2018, among the Company, U.S. Bank National Association, and certain financial institutions. (4)
Incorporated by Reference
31.1
31.1 Filed Electronically
31.2
Filed Electronically
32.1
Filed Electronically
32.2
Filed Electronically
101
Financial statements from the Quarterly Report on Form 10-Q of Hawkins, Inc. for the period ended June 30, 201928, 2020 filed with the SEC on July 31, 201930, 2020 formatted in Inline Extensible Business Reporting Language (XBRL)(iXBRL); (i) the Condensed Consolidated Balance Sheets at June 30, 201928, 2020 and March 31, 2019,29, 2020, (ii) the Condensed Consolidated Statements of Income for the three months ended June 28, 2020 and June 30, 2019, and July 1, 2018, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended June 28, 2020 and June 30, 2019, and July 1, 2018, (iv) the Condensed Consolidated Statements of Shareholder's Equity for the three months ended June 28, 2020 and June 30, 2019, and July 1, 2018, (v) the Condensed Consolidated Statements of Cash Flows for the three months ended June 28, 2020 and June 30, 2019, and July 1, 2018, and (vi) Notes to Condensed Consolidated Financial Statements.Filed Electronically
104 Cover Page Interactive Data File (embedded within the inline XBRL document)Filed Electronically



(1)Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010, filed on July 29, 2010 (File no. 000-07647).
(2)Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated October 28, 2009 and filed November 3, 2009 (File no. 000-07647).
(3)Incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed November 2, 2018 (File no. 333-228128).
(4)Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 8-K filed December 3, 2018 (File no. 000-07647).




(1)Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010, filed on July 29, 2010 (File no. 000-07647).
(2)Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated October 28, 2009 and filed November 3, 2009 (File no. 000-07647).

20

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HAWKINS, INC.
HAWKINS, INC.By:
By:/s/ Jeffrey P. Oldenkamp
Jeffrey P. Oldenkamp
Vice President, Chief Financial Officer, and Treasurer
(On behalf of the registrant and as principal financial and accounting officer)
Dated: July 31, 201930, 2020