• Hawkins, Inc. Reports Third Quarter Fiscal 2023 Results

    来源: Nasdaq GlobeNewswire / 01 2月 2023 15:10:56   America/Chicago

    ROSEVILLE, Minn., Feb. 01, 2023 (GLOBE NEWSWIRE) -- Hawkins, Inc. (Nasdaq: HWKN) today announced results for the three and nine months ended January 1, 2023, its third quarter of fiscal 2023.

    Third Quarter Fiscal Year 2023 Highlights:

    • Record third quarter performance for the following metrics – sales, gross profit, operating income, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), and operating cash flow.
    • Sales of $219.2 million, a 17% year-over-year increase, led by the Water Treatment group with sales growth of 38% over the same quarter in the prior year.
    • Gross profit of $36.3 million, a 7% increase over the prior year, contributing to operating income of $15.3 million, a 7% year-over-year increase.
    • Diluted earnings per share (“EPS”) of $0.51, 6% higher than the same period last year.
    • Adjusted EBITDA, a non-GAAP measure, of $23.8 million, a 10% increase over the same period of the prior year.
    • Operating cash flow of $25.7 million, a portion of which was used to pay down $10.0 million on our revolving line of credit, reducing our leverage ratio to 1.14x EBITDA.
    • Year-to-date EPS of $2.31, a 19% year-over-year increase.
    • Once again named to Newsweek's list of America's Most Responsible Companies.

    Executive Commentary – Patrick H. Hawkins, Chief Executive Officer and President:

    “We are pleased with our third-quarter results as we again achieved strong year-over-year revenue and gross profit growth as our team continued to navigate supply challenges exceptionally well. Our Industrial and Water Treatment groups continued to execute, with both achieving double-digit revenue growth. Our Health and Nutrition group slowed as expected, with sales declining 1% from last year. We expect continued softness in this segment through the fourth quarter. Our trailing twelve-month revenue grew to $930 million.”

    Mr. Hawkins continued, “Gross profit was again negatively impacted by continued rising material costs as we recorded a charge of $3.7 million for LIFO expense in the quarter, and a year-to-date LIFO charge of $12.7 million. Even with this large LIFO expense, our year-to-date gross profit is $129.4 million, 17% higher than a year ago. We have continued to make significant investments to support our future growth, with $32.3 million in capital expenditures so far this year, but our operating cash flow of $44.5 million has far exceeded those expenditures. As we look to the fourth quarter, we expect continued improvement in operating cash flow which will support reduction of our debt.”

    Third Quarter Financial Highlights:

    NET INCOME

    For the third quarter of fiscal 2023, the Company reported net income of $10.7 million, or $0.51 per diluted share, compared to net income for the third quarter of fiscal 2022 of $10.2 million, or $0.48 per diluted share.

    REVENUE

    Sales were $219.2 million for the third quarter of fiscal 2023, an increase of $32.1 million, or 17%, from sales of $187.1 million in the same period a year ago, driven primarily by increased selling prices. Industrial segment sales increased $13.8 million, or 14%, to $114.4 million for the current quarter, from $100.6 million in the same period a year ago. The increase in Industrial segment sales was driven by increased selling prices on many of our products driven by higher costs on many of our raw materials. Water Treatment segment sales increased $18.7 million, or 38%, to $68.5 million for the current quarter, from $49.8 million in the same period a year ago. Water Treatment sales increased as a result of increased selling prices on many of our products driven by higher costs on many of our raw materials, added sales from acquired businesses and increased sales of our products. Health and Nutrition segment sales decreased $0.5 million, or 1%, to $36.2 million for the current quarter, from $36.7 million in the same period a year ago. Health and Nutrition segment sales decreased as increased sales of our manufactured products were more than offset by a decrease in sales of our specialty distributed products.

    GROSS PROFIT

    Gross profit increased $2.4 million, or 7%, to $36.3 million, or 17% of sales, for the current quarter, from $33.9 million, or 18% of sales, in the same period a year ago. During the current quarter, the LIFO reserve increased, and gross profit decreased, by $3.7 million due primarily to rising raw material costs. In the same quarter a year ago, the LIFO reserve increased, and gross profit decreased, by $2.9 million. Gross profit for the Industrial segment increased $0.7 million, or 5%, to $16.0 million, or 14% of sales, for the current quarter, from $15.3 million, or 15% of sales, in the same period a year ago. Industrial segment gross profit increased as a result of increased sales as well as improved unit margins on many of our products. Gross profit for the Water Treatment segment increased $2.2 million, or 20%, to $13.3 million, or 19% of sales, for the current quarter, from $11.1 million, or 22% of sales, in the same period a year ago. Water Treatment segment gross profit increased as a result of increased sales, partially offset by the unfavorable year-over-year impact of the increased LIFO reserve. Gross profit for our Health and Nutrition segment decreased $0.5 million, or 7%, to $7.0 million, or 19% of sales, for the current quarter, from $7.5 million, or 21% of sales, in the same period a year ago. Health and Nutrition segment gross profit decreased as a result of decreased sales.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses increased $1.3 million to $21.0 million, or 10% of sales, for the current quarter, compared to $19.7 million, or 11% of sales, in the same period a year ago. Expenses increased primarily due to the added costs from the acquired businesses in our Water Treatment segment.

    ADJUSTED EBITDA

    Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP financial measure, is an important performance indicator and a key compliance measure under the terms of our credit agreement. An explanation of the computation of adjusted EBITDA is presented below. Adjusted EBITDA for the three months ended January 1, 2023 was $23.8 million, an increase of $2.1 million, or 10%, from $21.7 million in the same period a year ago. The increase was primarily due to improved gross profit.

    INCOME TAXES

    Our effective income tax rate was 24% for the current quarter, compared to 27% in the same period a year ago. The effective tax rate decreased from the prior year due to favorable tax provision adjustments recorded in the third quarter of fiscal 2023. The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes. Our effective tax rate for the full year is currently expected to be approximately 26-27%.

    BALANCE SHEET

    During the third quarter we had a modest reduction in our working capital. Working capital is still up from year end largely as a result of our usual buildup of raw material inventory as we typically bring in large volumes of certain raw materials on barges through the summer and fall months, as well as raw material price increases in the first nine months of fiscal 2023. Accounts receivable came down slightly in the third quarter, but is up from year end due to our revenue growth in the first three quarters. During the third quarter we reduced our debt by $10.0 million. We now have total outstanding debt of $131 million, which is 1.14x our trailing twelve-month adjusted EBITDA, down from 1.25x at the end of fiscal 2022.

    About Hawkins, Inc.

    Hawkins, Inc. was founded in 1938 and is a leading specialty chemical and ingredients company that formulates, distributes, blends, and manufactures products for its Industrial, Water Treatment, and Health & Nutrition customers. Headquartered in Roseville, Minnesota, the Company has 51 facilities in 25 states and creates value for its customers through superb customer service and support, quality products and personalized applications. Hawkins, Inc. generated $775 million of revenue in fiscal 2022 and has approximately 800 employees. For more information, including registering to receive email alerts, please visit www.hawkinsinc.com/investors.

    Reconciliation of Non-GAAP Financial Measures

    We report our consolidated financial results in accordance with U.S. generally accepted accounting principles (GAAP). To assist investors in understanding our financial performance between periods, we have provided certain financial measures not computed according to GAAP, including adjusted EBITDA. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies.

    Management uses this non-GAAP financial measure internally to understand, manage and evaluate our business and to make operating decisions. Management believes that this non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our financial condition and results of operations.

    We define adjusted EBITDA as GAAP net income adjusted for the impact of the following: net interest expense resulting from our net borrowing position; income tax expense; non-cash expenses including amortization of intangibles, depreciation and charges for the employee stock purchase plan and restricted stock grants; and non-recurring items of income or expense, if applicable.


    Adjusted EBITDAThree Months Ended Nine months ended
    (In thousands)January 1,
    2023    		 December 26,
    2021    		 January 1,
    2023    		 December 26,
    2021
    Net Income (GAAP)$10,733 $10,204 $48,428 $40,965
    Interest expense, net 1,546  317  3,858  995
    Income tax expense 3,453  3,870  16,637  14,573
    Amortization of intangibles 1,741  1,572  5,247  4,704
    Depreciation expense 5,261  4,398  15,126  13,155
    Non-cash compensation expense 1,084  1,046  2,764  2,707
    Non-recurring acquisition expenses —  285  —  296
    Adjusted EBITDA$23,818 $21,692 $92,060 $77,395



    HAWKINS, INC.
    CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
    (In thousands, except share and per-share data)

     Three Months Ended Nine Months Ended
     January 01,
    2023    		 December 26,
    2021    		 January 01,
    2023    		 December 26,
    2021
    Sales$219,218  $187,050  $706,953  $551,568 
    Cost of sales (182,947)  (153,110)  (577,559)  (441,367)
    Gross profit 36,271   33,940   129,394   110,201 
    Selling, general and administrative expenses (21,004)  (19,681)  (59,727)  (54,216)
    Operating income 15,267   14,259   69,667   55,985 
    Interest expense, net (1,546)  (317)  (3,858)  (995)
    Other income (expense) 465   132   (744)  548 
    Income before income taxes 14,186   14,074   65,065   55,538 
    Income tax expense (3,453)  (3,870)  (16,637)  (14,573)
    Net income$10,733  $10,204  $48,428  $40,965 
            
    Weighted average number of shares outstanding - basic 20,818,347   20,885,232   20,847,285   20,968,692 
    Weighted average number of shares outstanding - diluted 20,974,264   21,054,603   21,004,849   21,142,515 
    Basic earnings per share$0.52  $0.49  $2.32  $1.95 
    Diluted earnings per share$0.51  $0.48  $2.31  $1.94 
    Cash dividends declared per common share$0.1400  $0.1300  $0.4200  $0.3825 



    HAWKINS, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    (In thousands, except share data)

     January 1,
    2023    		 April 3,
    2022
    ASSETS   
    CURRENT ASSETS:   
    Cash and cash equivalents$6,146 $3,496
    Trade accounts receivables, net 125,471  122,826
    Inventories 101,581  94,985
    Prepaid expenses and other current assets 7,050  6,431
              Total current assets 240,248  227,738
    PROPERTY, PLANT, AND EQUIPMENT: 333,781  304,055
    Less accumulated depreciation 155,406  142,209
              Net property, plant, and equipment 178,375  161,846
    OTHER ASSETS:   
    Right-of-use assets 10,551  10,606
    Goodwill 77,401  77,401
    Intangible assets, net of accumulated amortization 74,946  80,193
    Deferred compensation plan asset 6,987  6,783
    Other 5,496  2,761
              Total other assets 175,381  177,744
              Total assets$594,004 $567,328
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
    CURRENT LIABILITIES:   
    Accounts payable — trade$50,573 $66,693
    Accrued payroll and employee benefits 16,320  19,034
    Income tax payable 1,801  39
    Current portion of long-term debt 9,913  9,913
    Short-term lease liability 1,689  1,657
    Other current liabilities 4,584  4,130
              Total current liabilities 84,880  101,466
    LONG-TERM DEBT, LESS CURRENT PORTION 120,710  115,644
    LONG-TERM LEASE LIABILITY 9,082  9,143
    PENSION WITHDRAWAL LIABILITY 4,004  4,276
    DEFERRED INCOME TAXES 24,297  23,422
    DEFERRED COMPENSATION LIABILITY 8,384  8,402
    OTHER LONG-TERM LIABILITIES 1,487  2,374
              Total liabilities 252,844  264,727
    COMMITMENTS AND CONTINGENCIES   
    SHAREHOLDERS’ EQUITY:   
    Common stock; authorized: 60,000,000 shares of $0.01 par value; 20,850,454 and 20,889,777
    shares issued and outstanding as of January 1, 2023 and April 3, 2022, respectively    		 209  209
    Additional paid-in capital 43,388  46,717
    Retained earnings 293,969  254,384
    Accumulated other comprehensive income 3,594  1,291
              Total shareholders’ equity 341,160  302,601
              Total liabilities and shareholders’ equity$594,004 $567,328



    HAWKINS, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
    (In thousands)

     Nine Months Ended
     January 1,
    2023    		 December 26,
    2021
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net income$48,428  $40,965 
    Reconciliation to cash flows:   
         Depreciation and amortization 20,373   17,859 
         Operating leases 1,442   1,416 
         Loss (Gain) on deferred compensation assets 744   (548)
         Stock compensation expense 2,764   2,707 
         Other 225   379 
         Changes in operating accounts providing (using) cash:   
              Trade receivables (2,336)  (10,847)
              Inventories (6,596)  (12,311)
              Accounts payable (16,231)  6,094 
              Accrued liabilities (3,652)  (1,589)
              Lease liabilities (1,453)  (1,431)
              Income taxes 1,762   (635)
              Other (929)  (3,350)
                   Net cash provided by operating activities 44,541   38,709 
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Purchases of property, plant, and equipment (32,307)  (15,700)
    Acquisitions —   (2,575)
    Other 352   230 
                   Net cash used in investing activities (31,955)  (18,045)
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Cash dividends declared and paid (8,843)  (8,101)
    New shares issued 2,014   889 
    Payroll taxes paid in exchange for shares withheld (1,550)  (1,467)
    Shares repurchased (6,557)  (8,545)
    Payments on revolving loan (40,000)  (15,000)
    Proceeds from revolving loan borrowings 45,000   32,000 
                   Net cash used in financing activities (9,936)  (224)
    NET INCREASE IN CASH AND CASH EQUIVALENTS 2,650   20,440 
    CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,496   2,998 
    CASH AND CASH EQUIVALENTS, END OF PERIOD$6,146  $23,438 
        
    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   
    Cash paid for income taxes$14,847  $15,208 
    Cash paid for interest$3,345  $746 
    Noncash investing activities - capital expenditures in accounts payable$3,844  $1,018 



    HAWKINS, INC.
    REPORTABLE SEGMENTS (UNAUDITED)
    (In thousands)

     Industrial Water
    Treatment    		 Health and
    Nutrition    		 Total
    Three months ended January 1, 2023:       
    Sales$114,436 $68,549 $36,233 $219,218
    Gross profit 15,994  13,268  7,009  36,271
    Selling, general, and administrative expenses 7,978  9,003  4,023  21,004
    Operating income 8,016  4,265  2,986  15,267
    Three months ended December 26, 2021:       
    Sales$100,554 $49,756 $36,740 $187,050
    Gross profit 15,303  11,103  7,534  33,940
    Selling, general, and administrative expenses 7,367  8,254  4,060  19,681
    Operating income 7,936  2,849  3,474  14,259
    Nine months ended January 1, 2023:       
    Sales$353,085 $233,527 $120,341 $706,953
    Gross profit 53,716  52,725  22,953  129,394
    Selling, general and administrative expenses 21,254  26,786  11,687  59,727
    Operating income 32,462  25,939  11,266  69,667
    Nine months ended December 26, 2021:       
    Sales$269,572 $168,105 $113,891 $551,568
    Gross profit 42,121  44,855  23,225  110,201
    Selling, general and administrative expenses 20,064  22,721  11,431  54,216
    Operating income 22,057  22,134  11,794  55,985


    Forward-Looking Statements. Various remarks in this press release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include those relating to consumer demand for products containing our ingredients and the impacts of those demands, expectations for results in our business segments and the timing of our filings with the Securities and Exchange Commission. These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs and assumptions. Forward-looking statements may be identified by terms, including “anticipate,” “believe,” “can,” “could,” “expect,” “intend,” “may,” “predict,” “should,” or “will” or the negative of these terms or other comparable terms. 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. Actual results may vary materially from those contained in forward looking statements based on a number of factors, including, but not limited to, changes in regulations, availability of technological improvements, the impact and severity of the COVID-19 outbreak, changes in the labor markets, our available cash for investments, changes in competition and price pressures, changes in demand and customer requirements or processes for our products, availability of product and disruptions to supplies, interruptions in production resulting from hazards, transportation limitations or other extraordinary events outside our control that may negatively impact our business or the supply chains in which we participate, changes in imported products and tariff levels, the availability of products and the prices at which they are available, the acceptance of new products by our customers and the timing of any such acceptance, and changes in product supplies. 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 April 3, 2022, as updated from time to time in amendments and subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date hereof. We do not undertake any obligation to update any forward-looking statements.

    Contacts:Jeffrey P. Oldenkamp
     Executive Vice President and Chief Financial Officer
     612/331-6910
     ir@HawkinsInc.com

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