Hawkins, Inc. · NASDAQ:HWKN
Hawkins — Investor Presentation (February 2022)
40 slides from Hawkins's investor presentation, Feb 3, 2022
Slide 1: Investor Presentation
Nasdaq: HWKN Investor Presentation FISCAL 2022, QUARTER 3 Published: February 3, 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. 83-year track record of growth 2. 36 consecutive years of dividends 3. Critical products and services 4. Executing on growth strategy ©2021 Hawkins, Inc. ©2021 Hawkins, Inc. 3
Slide 4: Growth Strategy
GROWTH STRATEGY ▪ Expand our specialty and value-added services ACQUISITIONS - Customer formulation - Technical and quality INTRODUCE NEW PRODUCTS - Sales & PRODUCT LINES ▪ Bolster and improve our extensive supplier base ▪ Add new Water Treatment facilities annually EXPAND CURRENT MARKETS & GROW NEW
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) 20.0 Dividends Share Repurchases 1.4% 15.0 $4.4 $5.9 DIVIDEND YIELD $4.1 10.0 5.0 $12.0 $9.8 $10.0 36 $8.7 $9.2 - CONSECUTIVE YEARS OF FY2017 FY2018 FY2019 FY2020 FY2021 CASH DIVIDENDS FY2017 FY2018 FY2019 FY202
Slide 7: Capital Allocation
CAPITAL ALLOCATION FREE CASH FLOW (IN MILLIONS) - Invest in the business 40.0 - Pay quarterly dividends 35.0 - Manage debt 30.0 25.0 - Repurchase shares 20.0 to offset dilution $35.4 $34.4 15.0 - Opportunistic acquisitions 10.0 $23.3 $23.0 5.0 $7.6 - FY2017 FY2018 FY2019 FY2020 FY2021 FY2017 FY2018
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 k
Slide 9: COVID-19 Snapshot
COVID-19 SNAPSHOT HAWKINS IS CONSIDERED PART ▪ Employee and Customer safety OF OUR COUNTRY’S ESSENTIAL CRITICAL is always a priority INFRASTRUCTURE - Hawkins strives to comply with all CDC requirements - Implemented additional processes and ▪ Hawkins impacts millions of people daily procedures to en
Slide 10: Company Snapshot
COMPANY SNAPSHOT Hawkins’ diversified market FISCAL 2021 REVENUE BY SEGMENT segments provide multiple avenues for sustainable and profitable growth and create synergies among the $153.5M $105.1M 26% 19% different segments. $273.4M 46% $275.2M $170.0M 51% $159.9M Three Business Segments: 28% 30% Wate
Slide 11: 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 33 water treatment facilities, while adding one to
Slide 12: Locations
LOCATIONS 49 FACILITIES IN 24 STATES WITH 750+ EMPLOYEES ©2021 Hawkins, Inc. 12
Slide 13: 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 14: Financials
FINANCIALS
Slide 15: Fiscal 2017-2021 Financials (in millions)
FISCAL 2017-2021 FINANCIALS (IN MILLIONS) SALES GROSS PROFIT NET INCOME 5.4% CAGR 6.0% CAGR 16.1% CAGR $41.0 $123.8 $100.9 $28.4 $596.9 $98.1 $95.9 $22.6 $24.4 $556.3 $540.2 $86.8 $483.6 $504.2 $16.0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2017 FY 2018* FY
Slide 16: Fiscal 2021 Full Year Financials
FISCAL 2021 FULL YEAR FINANCIALS REVENUE OPERATING INCOME ($ Million) ($ Million) DOUBLE-DIGIT YEAR-OVER-YEAR PROFIT GROWTH $55.9 $596.9 $41.7 $540.2 - Record annual revenue of $596.9M, up 10% Q4 FY20 Q4 FY21 Q4 FY20 Q4 FY21 - Record annual gross profit of $123.8M, up 23% - Record annual net income
Slide 17: Fiscal 2022 Third Quarter Financials
FISCAL 2022 THIRD QUARTER FINANCIALS REVENUE OPERATING INCOME 15TH CONSECUTIVE QUARTER ($ Million) ($ Million) OF YEAR-OVER-YEAR OPERATING INCOME GROWTH $187.1 $142.9 $14.3 $10.5 - Record quarterly revenue of $187.1M, growth Q3 FY21 Q3 FY22 Q3 FY21 Q3 FY22 of 31% over the prior year - Record third q
Slide 18: Fiscal 2022 Third Quarter Year-to-Date Financials
FISCAL 2022 THIRD QUARTER YEAR-TO-DATE FINANCIALS DOUBLE-DIGIT YEAR-OVER-YEAR GROWTH IN KEY REVENUE OPERATING INCOME ($ Million) ($ Million) MEASURES – REVENUE, GROSS PROFIT, OPERATING INCOME, NET INCOME AND DILUTED EARNINGS $551.6 PER SHARE (EPS) $433.9 $56.0 $43.0 - Record 3Q YTD revenue of $551.6
Slide 19: Fiscal 2022 Trailing Twelve Months Quarterly EPS
FISCAL 2022 TRAILING TWELVE MONTHS QUARTERLY EPS 2.50 2.37 2.26 2.17 16% EPS 5-year CAGR 1.93 2.00 1.72 1.56 1.43 1.50 1.33 TTM EPS 1.26 1.28 1.12 1.14 1.18 1.09 1.07 1.02 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 Q3 FY17 FY18 FY
Slide 20: Reporting Segments
REPORTING SEGMENTS
Slide 21: 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 22: 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 23: Industrial Financials (in millions)
INDUSTRIAL FINANCIALS (IN MILLIONS) SALES (3.5% CAGR) GROSS PROFIT (2.7% CAGR) $281.9 $275.2 $273.4 $43.3 $38.9 $38.9 $34.9 $247.4 $29.6 $238.6 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 SG&A (5.5% CAGR) OPERATING INCOME (-1.1% CAGR) $27.0 $17.1 $24.1 $16.3 $21.8
Slide 24: 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 25: 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 26: Differentiators
DIFFERENTIATORS ▪ Large Geographic Territory - Locations in 33 Cities in 20 States ▪ Full Line Product Offering - Chemistries and Equipment ▪ Route Sales/Service Business Model - Technical Application Specialists ©2021 Hawkins, Inc. 26
Slide 27: Water Treatment Financials (in millions)
WATER TREATMENT FINANCIALS (IN MILLIONS) SALES (7.2% CAGR) GROSS PROFIT (6.8% CAGR) $46.8 $159.9 $170.0 $41.9 $149.5 $36.0 $36.3 $38.0 $129.0 $138.5 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 FY 2020 SG&A (5.4% CAGR) OPERATING INCOME (8.4% CAGR) $24.5 $22.1 $22.3 $19.8 $
Slide 28: 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 - To
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 ©2021 Hawkins, Inc. 30
Slide 31: Health and Nutrition Financials (in millions)
HEALTH AND NUTRITION FINANCIALS (IN MILLIONS) SALES (7.2% CAGR) GROSS PROFIT (9.7% CAGR) $153.5 $33.6 $116.1 $118.3 $125.0 $105.1 $23.2 $23.1 $20.9 $20.1 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 SG&A (-2.0% CAGR) OPERATING INCOME (33.3% CAGR) $17.2 $17.8 $18.8
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: Key Brands
KEY BRANDS ©2021 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 c
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 / Manufact
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 12 Months Ended FY2018 Adjusted Net Diluted Net Income (loss) (loss) earnings (in thousands) December 26, 2021 December 27, 2020 (in thousands, except share and per Income per share share data) Net income (GAAP) $ 50,046 $ 36,662 As Reported (GAAP) $ (9,177
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