Hawkins, Inc. · NASDAQ:HWKN
Hawkins — Investor Presentation (November 2022)
39 slides from Hawkins's investor presentation, Nov 2, 2022
Slide 1: Investor Presentation
Nasdaq: HWKN Investor Presentation FISCAL 2023, QUARTER 2 Published: November 2, 2022
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. 84-year track record of growth 2. 37 consecutive years of dividends 3. Critical products and services 4. Executing on growth strategy ©2022 Hawkins, Inc. ©2022 Hawkins, Inc. 3
Slide 4: Growth Strategy
GROWTH STRATEGY ▪ Grow earnings ACQUISITIONS ▪ Expand our specialty and value-added services ▪ Bolster and improve our extensive supplier base INTRODUCE NEW PRODUCTS & PRODUCT LINES ▪ Add new Water Treatment facilities annually ▪ Invest in capabilities for higher margin / growth products EXPAND CURR
Slide 5: Strong Track Record of Accretive Acquisitions
STRONG TRACK RECORD OF ACCRETIVE ACQUISITIONS 12/2021 NAPCO Chemical Company, Inc in Texas (Water Treatment) 11/2021 Water & Waste Specialties, Inc in Alabama (Water Treatment) 09/2021 Southeast Water Systems, LLC in Alabama (Water Treatment) 01/2021 C&L Aqua and LC Blending, Inc. in Louisiana (Wate
Slide 6: Consistent Return of Capital to Shareholders
CONSISTENT RETURN OF CAPITAL TO SHAREHOLDERS DIVIDENDS & SHARE REPURCHASES (IN MILLIONS) 25.0 Dividends Share Repurchases 1.4% 20.0 $8.5 DIVIDEND YIELD 15.0 $4.4 $5.9 $4.1 10.0 $12.0 37 5.0 $9.2 $9.8 $10.0 $11.1 - CONSECUTIVE YEARS OF FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 FY2022 FY2022 CA
Slide 7: Capital Allocation
CAPITAL ALLOCATION OPERATING CASH FLOW (IN MILLIONS) - Invest in the business 70.0 - Pay dividends 60.0 - Manage debt 50.0 - Repurchase shares 40.0 to offset dilution 30.0 $58.9 $48.0 - Opportunistic acquisitions 20.0 $43.8 $42.8 $27.4 10.0 - FY2018 FY2019 FY2020 FY2021 FY2022 FY2018 FY2019 FY2020 F
Slide 8: 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 9: Company Snapshot
COMPANY SNAPSHOT Hawkins’ diversified market FISCAL 2022 REVENUE OF $774.5M segments provide multiple avenues for sustainable and profitable growth and create synergies among the $159.5M $105.1M 21% 19% different segments $386.9M 50% $275.2M $228.1M 51% $159.9M Three Business Segments: 29% 30% Water
Slide 10: Segment Growth Focus
SEGMENT GROWTH FOCUS ▪ Industrial - Grow pharmaceutical, food, and agricultural business through new product development, capital and people investments - Maintain large bulk purchases and sales to leverage supply chain ▪ Water Treatment - Grow all 39 water treatment facilities, while adding one to
Slide 11: Locations
LOCATIONS 51 FACILITIES IN 25 STATES WITH 800+ EMPLOYEES ©2022 Hawkins, Inc. 11
Slide 12: 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 13: Financials
FINANCIALS
Slide 14: Fiscal 2018-2022 Financials
FISCAL 2018-2022 FINANCIALS (IN MILLIONS, EXCEPT PER SHARE DATA) SALES GROSS PROFIT NET INCOME 34% CAGR $51.5 11% CAGR 14% CAGR $41.0 $146.5 $774.5 $123.8 $28.4 $100.9 $24.4 $556.3 $540.2 $596.9 $86.8 $95.9 $504.2 $16.0 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Slide 15: Fiscal 2022 Full Year Financials
FISCAL 2022 FULL YEAR FINANCIALS REVENUE OPERATING INCOME ($ Million) ($ Million) DOUBLE-DIGIT YEAR-OVER-YEAR PROFIT GROWTH $596.9 $774.5 $71.2 $55.9 FY21 FY22 FY21 FY22 - Record annual revenue of $774.5M, up 30% - Record annual gross profit of $146.5M, up 18% - Record annual net income and diluted
Slide 16: Fiscal 2023 Second Quarter Financials
FISCAL 2023 SECOND QUARTER FINANCIALS REVENUE OPERATING INCOME 18TH CONSECUTIVE QUARTER ($ Million) ($ Million) OF YEAR-OVER-YEAR OPERATING INCOME GROWTH $241.2 $183.3 $26.5 $19.6 - Record second quarter revenue of $241.2M, Q2 FY22 Q2 FY23 Q2 FY22 Q2 FY23 growth of 32% over the prior year - Record s
Slide 17: Fiscal 2023 Second Quarter Year-to-Date Financials
FISCAL 2023 SECOND QUARTER YEAR-TO-DATE FINANCIALS DOUBLE-DIGIT YEAR-OVER-YEAR GROWTH IN KEY REVENUE OPERATING INCOME ($ Million) ($ Million) MEASURES – REVENUE, GROSS PROFIT, OPERATING INCOME, NET INCOME AND DILUTED EARNINGS PER SHARE (EPS) $487.7 $364.5 $54.4 $41.7 - Record 2Q YTD revenue of $487.
Slide 18: Trailing Twelve Months Quarterly EPS
TRAILING TWELVE MONTHS QUARTERLY EPS 3.00 2.78 2.59 2.50 26% EPS 5-year CAGR 2.37 2.44 2.26 2.17 1.93 2.00 1.72 1.56 TTM EPS 1.43 1.50 1.26 1.28 1.33 1.14 1.18 0.99 0.96 1.02 1.00 0.89 0.85 0.86 0.70 0.50 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY18 FY19 FY20 FY21 FY22 FY
Slide 19: Reporting Segments
REPORTING SEGMENTS
Slide 20: 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 21: 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 22: Industrial Financials
INDUSTRIAL FINANCIALS (IN MILLIONS) SALES (12% CAGR) GROSS PROFIT (19% CAGR) $386.9 $59.6 $281.9 $275.2 $273.4 $247.4 $43.3 $34.9 $38.9 $29.6 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 SG&A (7% CAGR) OPERATING INCOME (39% CAGR) $27.0 $28.1 $24.1 $31.5 $22.8 $21.2
Slide 23: 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 24: 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 25: Differentiators
DIFFERENTIATORS ▪ Large Geographic Territory - Locations in 39 Cities in 23 States ▪ Full Line Product Offering - Chemistries and Equipment ▪ Route Sales/Service Business Model - Technical Application Specialists ©2022 Hawkins, Inc. 25
Slide 26: Water Treatment Financials
WATER TREATMENT FINANCIALS (IN MILLIONS) SALES (13% CAGR) GROSS PROFIT (11% CAGR) $228.1 $54.6 $46.8 $159.9 $170.0 $41.9 $149.5 $36.3 $38.0 $138.5 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 SG&A (13% CAGR) OPERATING INCOME (8% CAGR) $31.4 $22.1 $22.3 $23.2 $24.5
Slide 27: 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 28: 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 29: Product Categories
PRODUCT CATEGORIES - Energy, Immunity, and - Minerals Cognition Ingredients - Oils/Oil Powders - Amino Acids - Fibers - Antioxidants - Probiotics - Botanicals - Plant Proteins - Enzymes - Vitamins ©2022 Hawkins, Inc. 29
Slide 30: Health and Nutrition Financials
HEALTH AND NUTRITION FINANCIALS (IN MILLIONS) SALES (8% CAGR) GROSS PROFIT (12% CAGR) $153.5 $159.5 $33.6 $32.3 $118.3 $125.0 $105.1 $20.9 $23.1 $20.1 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 SG&A (-4% CAGR) OPERATING INCOME (68% CAGR) $17.2 $16.5 $18.8 $16.9 $
Slide 31: 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 32: Key Brands
KEY BRANDS ©2022 Hawkins, Inc. 32
Slide 33: Summary
SUMMARY
Slide 34: 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 35: Appendix
APPENDIX
Slide 36: 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 37: 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 38: Non-GAAP Measures
NON-GAAP MEASURES Adjusted EBITDA * Trailing 12 Months Ended FY2018 Adjusted Net Diluted Net Income (loss) (loss) earnings (in thousands) October 2, 2022 September 26, 2021 (in thousands, except per share Income per share data) Net income (GAAP) $ 54,476 $ 47,763 As Reported (GAAP) $ (9,177) $ (0.86
Slide 39: 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