hwkn-20231001

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

For the quarterly period ended October 1, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
			SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-7647


HAWKINS, INC.
(Exact name of registrant as specified in its charter)


Minnesota						41-0771293
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


2381 Rosegate, Roseville, Minnesota			55113
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	HWKN	Nasdaq 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 ☒ 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 ☒ 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

☐

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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


CLASS						Shares Outstanding at October 27, 2023
Common Stock, par value $.01 per share						20,943,750

HAWKINS, INC.

INDEX TO FORM 10-Q


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Balance Sheets – October 1, 2023 and April 2, 2023	1

	Condensed Consolidated Statements of Income – Three and Six Months Ended October 1, 2023 and October 2, 2022	2

	Condensed Consolidated Statements of Comprehensive Income – Three and Six Months Ended October 1, 2023 and October 2, 2022	3

	Condensed Consolidated Statements of Shareholder’s Equity – Three and Six Months Ended October 1, 2023 and October 2, 2022	4

	Condensed Consolidated Statements of Cash Flows – Six Months Ended October 1, 2023 and October 2, 2022	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15

Item 4.	Controls and Procedures	15

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	16

Item 4.	Mine Safety Disclosures	16

Item 5.	Other Information	16

Item 6.	Exhibits	17

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HAWKINS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)


	October 1, 2023		April 2, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,974	$	7,566
Trade accounts receivables, net	124,813		129,252
Inventories	68,500		88,777

Prepaid expenses and other current assets	2,966		6,449
Total current assets	207,253		232,044
PROPERTY, PLANT, AND EQUIPMENT:	361,362		344,753
Less accumulated depreciation	168,504		158,950
Net property, plant, and equipment	192,858		185,803
OTHER ASSETS:
Right-of-use assets	11,323		10,199
Goodwill	77,401		77,401
Intangible assets, net of accumulated amortization	71,491		73,060
Deferred compensation plan asset	8,917		7,367
Other	6,054		4,661
Total other assets	175,186		172,688
Total assets	$	575,297	$	590,535
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable — trade	$	61,192	$	53,705
Accrued payroll and employee benefits	12,416		17,279
Income tax payable	4,319		3,329
Current portion of long-term debt	9,913		9,913


Other current liabilities	6,622		6,645
Total current liabilities	94,462		90,871
LONG-TERM DEBT, LESS CURRENT PORTION	49,775		101,731
LONG-TERM LEASE LIABILITY	9,522		8,687
PENSION WITHDRAWAL LIABILITY	3,726		3,912
DEFERRED INCOME TAXES	24,190		23,800
DEFERRED COMPENSATION LIABILITY	10,317		9,343
OTHER LONG-TERM LIABILITIES	649		2,175
Total liabilities	192,641		240,519
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock; authorized: 60,000,000 shares of $0.01 par value; 20,787,626 and 20,850,454 shares issued and outstanding as of October 1, 2023 and April 2, 2023, respectively	208		209
Additional paid-in capital	35,918		44,443
Retained earnings	342,535		302,424
Accumulated other comprehensive income	3,995		2,940
Total shareholders’ equity	382,656		350,016
Total liabilities and shareholders’ equity	$	575,297	$	590,535

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except share and per-share data)


	Three Months Ended				Six Months Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Sales	$	236,526	$	241,192	$	487,646	$	487,735
Cost of sales	(182,640)		(194,818)		(381,769)		(394,612)

Gross profit	53,886		46,374		105,877		93,123
Selling, general and administrative expenses	(20,895)		(19,838)		(40,399)		(38,723)
Operating income	32,991		26,536		65,478		54,400
Interest expense, net	(717)		(1,383)		(1,865)		(2,312)
Other (expense) income	(289)		(446)		48		(1,209)
Income before income taxes	31,985		24,707		63,661		50,879
Income tax expense	(8,769)		(6,707)		(17,015)		(13,184)
Net income	$	23,216	$	18,000	$	46,646	$	37,695

Weighted average number of shares outstanding - basic	20,903,690		20,814,686		20,905,707		20,861,754
Weighted average number of shares outstanding - diluted	21,026,428		20,956,897		21,034,153		21,004,454

Basic earnings per share	$	1.11	$	0.86	$	2.23	$	1.81
Diluted earnings per share	$	1.10	$	0.86	$	2.22	$	1.79

Cash dividends declared per common share	$	0.16	$	0.14	$	0.31	$	0.28

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)


	Three Months Ended				Six Months Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Net income	$	23,216	$	18,000	$	46,646	$	37,695
Other comprehensive income, net of tax:

Unrealized gain on interest rate swap	306		1,977		1,055		2,442


Total comprehensive income	$	23,522	$	19,977	$	47,701	$	40,137

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except share data)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount
BALANCE — April 2, 2023	20,850,454	$	209	$	44,443	$	302,424	$	2,940	$	350,016
Cash dividends declared and paid ($0.15 per share)	—	—		—		(3,160)		—		(3,160)
Share-based compensation expense	—	—		959		—		—		959
Vesting of restricted stock	105,600	1		(1)		—		—		—
Shares surrendered for payroll taxes	(48,478)	(1)		(2,139)		—		—		(2,140)
ESPP shares issued	35,281	—		1,147		—		—		1,147

Other comprehensive income, net of tax	—	—		—		—		749		749
Net income	—	—		—		23,430		—		23,430
BALANCE — July 2, 2023	20,942,857	$	209	$	44,409	$	322,694	$	3,689	$	371,001
Cash dividends declared and paid ($0.16 per share)	—	—		—		(3,375)		—		(3,375)
Share-based compensation expense	—	—		1,260		—		—		1,260
Vesting of restricted stock	12,565	—		—		—		—		—


Shares repurchased	(167,796)	(1)		(9,751)		—		—		(9,752)
Other comprehensive income, net of tax	—	—		—		—		306		306
Net income	—	—		—		23,216		—		23,216
BALANCE — October 1, 2023	20,787,626	$	208	$	35,918	$	342,535	$	3,995	$	382,656




















	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount
BALANCE — April 3, 2022	20,889,777	$	209	$	46,717	$	254,384	$	1,291	$	302,601
Cash dividends declared and paid ($0.14 per share)	—	—		—		(2,958)		—		(2,958)
Share-based compensation expense	—	—		595		—		—		595
Vesting of restricted stock	102,860	1		(1)		—		—		—
Shares surrendered for payroll taxes	(36,410)	—		(1,550)		—		—		(1,550)
ESPP shares issued	32,768	—		986		—		—		986
Shares repurchased	(181,657)	(2)		(6,555)		—		—		(6,557)
Other comprehensive income, net of tax	—	—		—		—		465		465
Net income	—	—		—		19,695		—		19,695
BALANCE — July 3, 2022	20,807,338	$	208	$	40,192	$	271,121	$	1,756	$	313,277
Cash dividends declared and paid ($0.14 per share)	—	—		—		(2,942)		—		(2,942)
Share-based compensation expense	—	—		1,085		—		—		1,085
Vesting of restricted stock	10,287	—		—		—		—		—

ESPP shares issued	—	—		17		—		—		17

Other comprehensive income, net of tax	—	—		—		—		1,977		1,977
Net income	—	—		—		18,000		—		18,000
BALANCE — October 2, 2022	20,817,625	$	208	$	41,294	$	286,179	$	3,733	$	331,414

See accompanying notes to condensed consolidated financial statements.

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Six Months Ended
	October 1, 2023		October 2, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	46,646	$	37,695
Reconciliation to cash flows:
Depreciation and amortization	14,506		13,371
Operating leases	1,115		945

(Gain) loss on deferred compensation assets	(48)		1,208

Stock compensation expense	2,219		1,680

Other	(34)		187
Changes in operating accounts providing (using) cash:
Trade receivables	4,909		(8,481)
Inventories	20,752		(18,077)
Accounts payable	6,421		(4,609)
Accrued liabilities	(7,149)		(8,600)
Lease liabilities	(1,127)		(972)
Income taxes	990		2,031
Other	3,430		2,425
Net cash provided by operating activities	92,630		18,803
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment	(16,922)		(20,668)


Acquisitions	(3,355)		—
Other	335		296
Net cash used in investing activities	(19,942)		(20,372)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends declared and paid	(6,535)		(5,900)
New shares issued	1,147		1,004
Payroll taxes paid in exchange for shares withheld	(2,140)		(1,550)


Shares repurchased	(9,752)		(6,557)

Payments on revolving loan	(52,000)		(30,000)

Proceeds from revolving loan borrowings	—		45,000
Net cash (used in) provided by financing activities	(69,280)		1,997
NET INCREASE IN CASH AND CASH EQUIVALENTS	3,408		428
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	7,566		3,496
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	10,974	$	3,924

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes	$	16,025	$	11,148
Cash paid for interest	$	2,002	$	1,879
Noncash investing activities - capital expenditures in accounts payable	$	2,970	$	2,535

See accompanying notes to condensed consolidated financial statements.

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 April 2, 2023, 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 six months ended October 1, 2023 are not necessarily indicative of the results that may be expected for the full year.

References to fiscal 2023 refer to the fiscal year ended April 2, 2023 and references to fiscal 2024 refer to the fiscal year ending March 31, 2024.

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 April 2, 2023, previously filed with the SEC. There has been no significant change in our accounting policies since the end of fiscal 2023.

Note 2 — Acquisitions and Asset Sales

Acquisition of EcoTech Enterprises, Inc.: On July 14, 2023, we acquired substantially all the assets of EcoTech Enterprises, Inc. ("EcoTech") for $3.4 million, under the terms of a purchase agreement with EcoTech and its shareholders. EcoTech was a water treatment chemical distribution company operating primarily in Arkansas. The $3.4 million purchase price was allocated primarily to customer lists, to be amortized over 10 years, property, plant and equipment, and net working capital. The results of operations since the acquisition date and the assets are included in our Water Treatment segment. Costs associated with this transaction were not material and were expensed as incurred.

Sale of bleach packaging assets: In the fourth quarter of fiscal 2023, we sold certain assets in our Industrial segment related to our consumer bleach packaging business for $7 million. These assets were not core to our Industrial segment operations, where we tend to focus our manufacturing operations on bulk products. The assets sold included plant equipment, inventory and intangible assets, all related to the packaging of bleach. We realized a gain of $3 million on this sale, which has been recorded within selling, general and administrative expenses.

Note 3 - 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 operating segments as well as types of products 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. The following tables disaggregate external customer net sales by major revenue stream for the six months ended October 1, 2023 and October 2, 2022:


	Three months ended October 1, 2023
(In thousands)	Industrial		Water Treatment		Health and Nutrition		Total
Manufactured, blended or repackaged products (1)	$	83,890	$	90,964	$	10,858	$	185,712
Distributed specialty products (2)	—		—		26,113		26,113
Bulk products (3)	13,149		8,560		—		21,709
Other	1,496		1,401		95		2,992
Total external customer sales	$	98,535	$	100,925	$	37,066	$	236,526

	Three months ended October 2, 2022
(In thousands)	Industrial		Water Treatment		Health and Nutrition		Total
Manufactured, blended or repackaged products (1)	$	93,548	$	77,172	$	11,736	$	182,456
Distributed specialty products (2)	—		—		28,677		28,677
Bulk products (3)	18,132		7,720		—		25,852
Other	2,259		1,596		352		4,207
Total external customer sales	$	113,939	$	86,488	$	40,765	$	241,192

	Six months ended October 1, 2023
(In thousands)	Industrial		Water Treatment		Health and Nutrition		Total
Manufactured, blended or repackaged products (1)	$	186,565	$	175,749	$	21,099	$	383,413
Distributed specialty products (2)	—		—		52,267		52,267
Bulk products (3)	28,359		16,081		—		44,440
Other	4,484		2,746		296		7,526
Total external customer sales	$	219,408	$	194,576	$	73,662	$	487,646

	Six months ended October 2, 2022
(In thousands)	Industrial		Water Treatment		Health and Nutrition		Total
Manufactured, blended or repackaged products (1)	$	195,160	$	147,529	$	23,697	$	366,386
Distributed specialty products (2)	—		—		59,766		59,766
Bulk products (3)	38,587		14,510		—		53,097
Other	4,902		2,939		645		8,486
Total external customer sales	$	238,649	$	164,978	$	84,108	$	487,735

(1)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.

(2)This line includes non-manufactured distributed specialty products in our Health and Nutrition segment, which may be sold out of one of our facilities or direct shipped to our customers.

(3)This line includes bulk products in our Industrial and Water Treatment segments 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.

Note 4 – Earnings per Share

Basic earnings per share (“EPS”) is 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.

Basic and diluted EPS were calculated using the following:


	Three Months Ended		Six Months Ended
	October 01, 2023	October 02, 2022	October 01, 2023	October 02, 2022
Weighted-average common shares outstanding—basic	20,903,690	20,814,686	20,905,707	20,861,754
Dilutive impact of performance units and restricted stock	122,738	142,211	128,446	142,700
Weighted-average common shares outstanding—diluted	21,026,428	20,956,897	21,034,153	21,004,454

For each of the periods presented, there were no shares excluded from the calculation of weighted-average common shares for diluted EPS.

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). The carrying value of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short-term nature of these instruments. Because of the variable-rate nature of our debt under our credit facility, our debt also approximates fair value.

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. Both of these assets are classified as long-term assets on our balance sheet, with the portion of the deferred compensation retirement plan assets expected to be paid within twelve months classified as current assets. 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 assets relate to contributions made to a non-qualified compensation plan 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 October 1, 2023 and April 2, 2023.


(In thousands)		October 1, 2023		April 2, 2023
Assets
Deferred compensation plan assets	Level 1	$	9,058	$	7,659
Interest rate swap	Level 2	$	5,473	$	4,028

Note 6 – Inventories

Inventories at October 1, 2023 and April 2, 2023 consisted of the following:


	October 1, 2023		April 2, 2023
(In thousands)
Inventory (FIFO basis)	$	104,878	$	128,589
LIFO reserve	(36,378)		(39,812)
Net inventory	$	68,500	$	88,777

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method was $83.9 million at October 1, 2023 and $101.4 million at April 2, 2023. The remainder of the inventory was valued and accounted for under the FIFO method.

Note 7 – Goodwill and Intangible Assets

The carrying amount of goodwill was $77.4 million as of October 1, 2023 and April 2, 2023, of which $44.9 million was related to our Health and Nutrition segment, $26.0 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 October 1, 2023 and April 2, 2023 is as follows:


	October 1, 2023						April 2, 2023
(In thousands)	Gross Amount		Accumulated Amortization		Net		Gross Amount		Accumulated Amortization		Net
Finite-life intangible assets
Customer relationships	$	110,894	$	(41,561)	$	69,333	$	109,107	$	(38,377)	$	70,730
Trademarks and trade names	$	6,370	$	(5,467)	$	903	$	6,370	$	(5,267)	$	1,103
Other finite-life intangible assets	3,941		(3,913)		28		3,904		(3,904)		—
Total finite-life intangible assets	121,205		(50,941)		70,264		119,381		(47,548)		71,833
Indefinite-life intangible assets	1,227		—		1,227		1,227		—		1,227
Total intangible assets	$	122,432	$	(50,941)	$	71,491	$	120,608	$	(47,548)	$	73,060

Note 8 – Debt

Debt at October 1, 2023 and April 2, 2023 consisted of the following:


	October 1, 2023		April 2, 2023

(In thousands)

Senior secured revolving loan	$	60,000	$	112,000

Less: unamortized debt issuance costs	(312)		(356)
Total debt, net of debt issuance costs	59,688		111,644
Less: current portion of long-term debt	(9,913)		(9,913)
Total long-term debt	$	49,775	$	101,731

We were in compliance with all covenants of our credit agreement as of October 1, 2023.

Note 9 – 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 March 29, 2020 are closed to examination by the Internal Revenue Service, and with few exceptions, state and local income tax jurisdictions. Our effective income tax rate was 27% for the six months ended October 1, 2023, compared to 26% for the six months ended October 2, 2022. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.

Note 10 – 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 2024 and fiscal 2023. 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 zero shares and 70,859 shares in the aggregate for fiscal 2024. 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 six months ended October 1, 2023:


	Shares	Weighted- Average Grant Date Fair Value
Unvested at beginning of period	189,258	$	34.64
Granted	61,819	43.06
Vested	(105,600)	31.74

Unvested at end of period	145,477