Hawkins, Inc. · NASDAQ:HWKN
Hawkins — Q3 FY2024 Earnings Presentation
40 slides from Hawkins's earnings presentation, Jan 31, 2024
Slide 1: Investor Presentation
Nasdaq: HWKN Investor Presentation FISCAL 2024, QUARTER 3 Published: January 31, 2024
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS The information contained in this presentation includes “forward-looking statements” which reflect management’s expectations or beliefs as of the date of this presentation. Hawkins, Inc. cautions that actual future results could differ materially from the forward-looking s
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS 1. 85-year track record of growth 2. 38 consecutive years of dividends 3. Critical products and services 4. Executing on growth strategy ©2024 Hawkins, Inc. ©2023 Hawkins, Inc. 3
Slide 4: Our Mission, Promise & Core Values
OUR MISSION, PROMISE & CORE VALUES To supply quality products and innovative solutions with exceptional service. We will respond quickly to changing customer needs with a focus on safety, technical expertise, and responsible care of the environment and of our community. Ry Cs Ce Ad Tk Rs RESPONSIBIL
Slide 5: Growth Strategy
GROWTH STRATEGY ▪ Grow earnings ACQUISITIONS ▪ Expand our specialty and value-added services ▪ Bolster and improve our extensive supplier base INVEST IN NEW CAPABILTIES ▪ Add new Water Treatment facilities annually ▪ Invest in capabilities for higher margin / growth products INTRODUCE NEW PRODUCTS ▪
Slide 6: Trailing Twelve Months Quarterly EPS
TRAILING TWELVE MONTHS QUARTERLY EPS 4.00 3.48 3.50 28% EPS 5-year CAGR 3.28 3.04 3.00 2.78 2.81 2.86 2.59 2.37 2.44 2.50 2.17 2.26 TTM EPS 1.93 2.00 1.72 1.56 1.33 1.43 1.50 1.18 1.26 1.28 1.14 0.96 1.02 1.00 0.86 0.50 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY19 FY20
Slide 7: Strong Track Record of Accretive Acquisitions
STRONG TRACK RECORD OF ACCRETIVE ACQUISITIONS 10/2023 Water Solutions Unlimited in Indiana (Water Treatment) 10/2023 Miami Products & Chemical Company in Ohio (Water Treatment) 07/2023 EcoTech Enterprises in Arkansas (Water Treatment) 12/2021 NAPCO Chemical Company in Texas (Water Treatment) 11/2021
Slide 8: Consistent Return of Capital to Shareholders
CONSISTENT RETURN OF CAPITAL TO SHAREHOLDERS DIVIDENDS & SHARE REPURCHASES (IN MILLIONS) 25.0 Dividends Share Repurchases 1.5% 20.0 $8.5 DIVIDEND YIELD 15.0 $4.4 $6.6 $5.9 $4.1 10.0 $12.0 $12.0 38 5.0 $9.8 $10.0 $11.1 - CONSECUTIVE YEARS OF FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 FY2023 FY2
Slide 9: Capital Allocation
CAPITAL ALLOCATION OPERATING CASH FLOW (IN $ MILLIONS) - Invest in the business 90.0 - Pay dividends 80.0 70.0 - Manage debt 60.0 - Repurchase shares 50.0 to offset dilution 40.0 $77.4 30.0 - Opportunistic acquisitions $48.0 $58.9 $43.8 $42.8 20.0 10.0 - FY2019 FY2020 FY2021 FY2022 FY2023 FY2019 FY2
Slide 10: Environmental, Social, and Governance
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE ▪ Environmental - Products we sell generally can be neutralized to a safe pH balance, reducing their impact on the environment - Many of our products can be used to help our customers improve efficiencies and reduce emissions ▪ Social - Supply the products that
Slide 11: Company Snapshot
COMPANY SNAPSHOT Hawkins’ diversified market FISCAL 2023 REVENUE OF $935.1M segments provide multiple avenues for sustainable and profitable growth and create synergies among the $159.4M $105.1M 17% 19% different segments $470.8M 50% $275.2M $304.9M 51% $159.9M Three Business Segments: 33% 30% Water
Slide 12: Segment Growth Focus
SEGMENT GROWTH FOCUS ▪ Water Treatment - Grow all 46 water treatment facilities, while adding new locations through acquisitions or new greenfield expansion - Continued focus on superior service with local expertise ▪ Industrial - Grow pharmaceutical, food, and agricultural business through new prod
Slide 13: Locations
LOCATIONS 58 FACILITIES IN 26 STATES WITH 900+ EMPLOYEES ©2024 Hawkins, Inc. 13
Slide 14: People & Culture Matter
PEOPLE & CULTURE MATTER ▪ Strong Supplier ▪ Long-Term Customers Relationships - Strong, long-term relationships - Deliveries 365 days/year - Strong partnerships with key suppliers including caustic ▪ Local Community soda, hydrochloric acid, Involvement phosphates and specialty - Products to municipa
Slide 15: Infrastructure Differentiators
INFRASTRUCTURE DIFFERENTIATORS ▪ 58 locations to serve our customers ▪ Hawkins Fleet - 46 Water Treatment locations - 230+ Water Treatment Route Sales - 10 Manufacturing facilities Trucks to deliver the last mile to the customer - 2 main office locations - 35+ Tractors ▪ Facility Space - 100+ Traile
Slide 16: Financials
FINANCIALS
Slide 17: Fiscal 2019-2023 Financials
FISCAL 2019-2023 FINANCIALS (IN MILLIONS, EXCEPT PER SHARE DATA) SALES GROSS PROFIT NET INCOME 14% CAGR 15% CAGR 25% CAGR $60.0 $51.5 $935.1 $146.5 $165.1 $41.0 $774.5 $123.8 $100.9 $28.4 $556.3 $540.2 $596.9 $95.9 $24.4 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Slide 18: Fiscal 2024 Third Quarter Financials
FISCAL 2024 THIRD QUARTER FINANCIALS REVENUE OPERATING INCOME 23rd CONSECUTIVE QUARTER ($ Million) ($ Million) OF YEAR-OVER-YEAR OPERATING INCOME GROWTH $219.2 $208.5 $15.3 $18.5 - Third quarter revenue of $208.5M, decline of Q3 FY23 Q3 FY24 Q3 FY23 Q3 FY24 5% from the prior year - Record 3rd quarte
Slide 19: Fiscal 2024 Third Quarter Year-to-Date Financials
FISCAL 2024 THIRD QUARTER YEAR-TO-DATE FINANCIALS DOUBLE-DIGIT YEAR-OVER-YEAR GROWTH IN KEY REVENUE OPERATING INCOME ($ Million) ($ Million) MEASURES, INCLUDING GROSS PROFIT, OPERATING INCOME, NET INCOME AND DILUTED EARNINGS $707.0 $696.1 PER SHARE (EPS) $69.7 $84.0 - Year-to-date revenue of $696.1M
Slide 20: Reporting Segments
REPORTING SEGMENTS
Slide 21: Water Treatment Group overview
Our Water Treatment Group specializes in providing chemicals, equipment, and solutions for treatment of potable water, municipal and industrial wastewater, agricultural water, and industrial process water. Our salesperson/route driver is a trained technician who can deliver our products and diagnose
Slide 22: Differentiators
DIFFERENTIATORS ▪ Large Geographic Territory - Locations in 46 Cities in 24 States ▪ Full Line Product Offering - Chemistries and Equipment ▪ Route Sales/Service Business Model - Technical Application Specialists ©2024 Hawkins, Inc. 22
Slide 23: Water Treatment Financials
WATER TREATMENT FINANCIALS (IN MILLIONS) SALES (20% CAGR) GROSS PROFIT (15% CAGR) $67.2 $304.9 $54.6 $228.1 $46.8 $38.0 $41.9 $149.5 $159.9 $170.0 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 SG&A (16% CAGR) OPERATING INCOME (14% CAGR) $35.7 $31.4 $31.5 $24.5 $19.5
Slide 24: Focus Areas
FOCUS AREAS - Municipal Drinking Water - Breweries/Wineries - Municipal Wastewater - Agricultural Water Treatment - Municipal Swimming Pools o Poultry o Swine - Industrial Wastewater o Dairy - Industrial Process Water o Citrus Groves - Heating/Boiler o Farm Crops - Cooling Systems/Cooling - Towers ©
Slide 25: Industrial Group overview
Our Industrial Group formulates, manufactures, and distributes specialty and industrial chemicals. Hawkins also provides custom toll blending and product development services for our customers.
Slide 26: Focus Areas
FOCUS AREAS ▪ Typical end markets: ▪ Market Focus Areas: - Industrial Manufacturers - Food Ingredients - Food Processors - Pharmaceutical - Pharmaceutical - Oil and Gas - Oil Fields - Chemical Processing - Surface Finishers - Agricultural - Agricultural Operations - Electronics - Plating - Energy ©2
Slide 27: Industrial Financials
INDUSTRIAL FINANCIALS (IN MILLIONS) GROSS PROFIT (18% CAGR) SALES (14% CAGR) $470.8 $68.1 $386.9 $59.6 $281.9 $275.2 $273.4 $43.3 $34.9 $38.9 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 SG&A (3% CAGR) OPERATING INCOME (37% CAGR) $27.0 $28.1 $25.7 $22.8 $24.1 $42.4
Slide 28: Differentiators
DIFFERENTIATORS ▪ Technical Knowledge ▪ Services Include: - 80+ Years of Experience - Contract Manufacturing and Packaging ▪ Geographic Distribution - Regulatory and Safety Assistance - Multiple Manufacturing Facilities with - Inventory Management Extensive Storage Capacity - Remote Tank Monitoring
Slide 29: Health & Nutrition Group overview
Our Health & Nutrition Group provides a broad spectrum of high-quality ingredients for use in dietary supplements, functional food and beverage, pharmaceutical and pet food products. Our Health & Nutrition Group has a team of professionals trained to sell all product categories, to fully support pro
Slide 30: Product Categories
PRODUCT CATEGORIES - Energy, Immunity, and - Minerals Cognition Ingredients - Oils/Oil Powders - Amino Acids - Fibers - Antioxidants - Probiotics - Botanicals - Plant Proteins - Enzymes - Vitamins - Joint Products ©2024 Hawkins, Inc. 30
Slide 31: Health and Nutrition Financials
HEALTH AND NUTRITION FINANCIALS (IN MILLIONS) SALES (6% CAGR) GROSS PROFIT (7% CAGR) $153.5 $159.5 $159.4 $33.6 $32.3 $29.8 $125.0 $105.1 $23.1 $20.1 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 OPERATING INCOME SG&A (-2% CAGR) (23% CAGR) $17.2 $16.5 $16.9 $16.4 $1
Slide 32: Differentiators
DIFFERENTIATORS Our Health & Nutrition group is positioned as a one-stop ingredient solution provider to its customers and is highly regarded as a leader in the health and nutrition industry - Robust product portfolio - Represents key brand manufacturers that offer science-based, clinically studied
Slide 33: Innovation – Our Global Brand Partners
INNOVATION – OUR GLOBAL BRAND PARTNERS ©2024 Hawkins, Inc. 33
Slide 34: Summary
SUMMARY
Slide 35: Business Strategy
BUSINESS STRATEGY ▪ Expand our specialty and value-added services - Customer formulation - Technical and quality - Sales ▪ Add new Water Treatment facilities annually ▪ Bolster and improve our extensive supplier base ▪ Invest in higher margin/growth production capabilities ▪ Foster strong people cul
Slide 36: Appendix
APPENDIX
Slide 37: End Markets Served
END MARKETS SERVED ▪ Pharmaceutical ▪ Water Usage ▪ Health and Nutrition - Sugars - Wastewater - Vitamins - Excipients - Drinking Water - Amino Acids - Phosphates - Pools - Minerals - Cleaners, Acid, Alkaline - Bioaugmentation - Botanicals - Joint Products ▪ Food and Beverage ▪ Industrial/Manufactur
Slide 38: Significant Products
SIGNIFICANT PRODUCTS - Acetic Acid - Formic Acid - Flocculants - Ammonia and Aqua - Hydrochloric Acid - Coagulants Ammonia - Nitric Acid - Precipitants - Bleach - Phosphoric Acid - Antifoams - Calcium Chloride - Propionic Acid - Fluoridation - Caustic Potash (Potassium - Propylene Glycol - Equipment
Slide 39: Non-GAAP Measures
NON-GAAP MEASURES Adjusted EBITDA * Trailing Twelve Months Ended (in thousands) December 31, 2023 January 1, 2023 Net income (GAAP) $ 73,143 $ 59,005 Interest expense 4,409 4,266 Income tax expense 26,193 20,502 Amortization of intangibles 7,463 7,004 Depreciation expense 22,453 19,639 * We define a
Slide 40: Celebrating 80+ Years of Serving Our Customers
Celebrating 80+ Years of Serving Our Customers Questions/Comments Jeffrey P. Oldenkamp Executive Vice President and Chief Financial Officer call: 612.331.6910 Email (Investor Relations): ir@hawkinsinc.com