Hawkins, Inc. · NASDAQ:HWKN
Hawkins — Investor Presentation (October 2024)
41 slides from Hawkins's investor presentation, Oct 30, 2024
Slide 1: Investor Presentation
Nasdaq: HWKN Investor Presentation FISCAL 2025, QUARTER 2 Published: October 30, 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. 86-year track record of growth 2. 39 consecutive years of dividends 3. Critical products and services 4. Executing on growth strategy ©2024 Hawkins, Inc. ©2024 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 4.50 3.85 3.91 4.00 25% EPS 5-year CAGR 3.48 3.59 3.50 3.28 3.04 2.78 2.81 2.86 3.00 2.59 2.37 2.44 TTM EPS 2.50 2.17 2.26 1.93 2.00 1.72 1.56 1.33 1.43 1.50 1.18 1.26 1.28 1.00 0.50 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY20 FY21 FY
Slide 7: Strong Track Record of Accretive Acquisitions
STRONG TRACK RECORD OF ACCRETIVE ACQUISITIONS 10/2024 Water Guard in North Carolina (Water Treatment) 07/2024 Wofford Water Service in Mississippi (Water Treatment) 06/2024 Intercoastal Trading in Maryland (Water Treatment) 03/2024 Industrial Research Corporation in Louisiana (Water Treatment) 10/20
Slide 8: Consistent Return of Capital to Shareholders
CONSISTENT RETURN OF CAPITAL TO SHAREHOLDERS DIVIDENDS & SHARE REPURCHASES (IN MILLIONS) 30.0 Dividends Share Repurchases 0.8% 25.0 20.0 $11.3 DIVIDEND YIELD 15.0 $8.5 $6.6 $5.9 $4.1 10.0 39 $11.1 $12.0 $13.2 5.0 $9.8 $10.0 - CONSECUTIVE YEARS OF FY2020 FY2020 FY2021 FY2021 FY2022 FY2022 FY2023 FY20
Slide 9: Stock Performance
STOCK PERFORMANCE 500 Hawkins, Inc. 400 300 200 100 0 2019 2020 2021 2022 2023 2024 Hawkins, Inc. Nasdaq Composite Index S&P Small Cap 600 Index Nasdaq Industrial Index Russell 2000 Index This graph compares the cumulative total shareholder return on our common shares with the cumulative total retur
Slide 10: Capital Allocation
CAPITAL ALLOCATION OPERATING CASH FLOW (IN $ MILLIONS) - Invest in the business 180.0 - Pay dividends 160.0 140.0 - Manage debt 120.0 - Repurchase shares 100.0 to offset dilution 80.0 $159.5 60.0 - Opportunistic acquisitions 40.0 $77.4 $58.9 20.0 $43.8 $42.8 - FY2020 FY2021 FY2022 FY2023 FY2024 FY20
Slide 11: 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 12: Company Snapshot
COMPANY SNAPSHOT Hawkins’ diversified market FISCAL 2024 REVENUE OF $919.2M segments provide multiple avenues for sustainable and profitable growth and create synergies among the $146.4M $105.1M 16% 19% different segments $409.5M 44% $275.2M $363.3M 51% $159.9M Three Business Segments: 40% 30% Water
Slide 13: Segment Growth Focus
SEGMENT GROWTH FOCUS ▪ Water Treatment - Grow all 49 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 14: Locations
LOCATIONS 61 FACILITIES IN 28 STATES WITH ~1,000 EMPLOYEES ©2024 Hawkins, Inc. 14
Slide 15: People & Culture Matter
PEOPLE & CULTURE MATTER ▪ Strong Supplier Relationships ▪ Long-Term Customers - Strong partnerships with key - Strong, long-term relationships suppliers including caustic - Deliveries 365 days/year soda, hydrochloric acid, ▪ Local Community phosphates and specialty Involvement products - Products to
Slide 16: Infrastructure Differentiators
INFRASTRUCTURE DIFFERENTIATORS ▪ 61 locations to serve our customers ▪ Hawkins Fleet - 49 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 17: Financials
FINANCIALS
Slide 18: Fiscal 2020-2024 Financials
FISCAL 2020-2024 FINANCIALS (IN MILLIONS, EXCEPT PER SHARE DATA) SALES GROSS PROFIT NET INCOME $75.4 14% CAGR 18% CAGR 28% CAGR $60.0 $935.1 $919.2 $51.5 $193.6 $774.5 $165.1 $41.0 $146.5 $596.9 $123.8 $540.2 $28.4 $100.9 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2020 FY 2021 FY 2022 FY 2023 FY 202
Slide 19: Fiscal 2025 Second Quarter Financials
FISCAL 2025 SECOND QUARTER FINANCIALS REVENUE OPERATING INCOME 26th CONSECUTIVE QUARTER ($ Million) ($ Million) OF YEAR-OVER-YEAR OPERATING $236.5 $247.0 INCOME GROWTH $33.0 $33.7 - Record 2nd quarter revenue of $247.0M, Q2 FY24 Q2 FY25 Q2 FY24 Q2 FY25 growth of 4% from the prior year - Record 2nd q
Slide 20: Fiscal 2025 Second Quarter Year-to-Date Financials
FISCAL 2025 SECOND QUARTER YEAR-TO-DATE FINANCIALS DOUBLE-DIGIT YEAR-OVER-YEAR GROWTH IN KEY REVENUE OPERATING INCOME ($ Million) ($ Million) MEASURES, INCLUDING GROSS PROFIT, OPERATING INCOME, NET INCOME AND DILUTED EARNINGS $487.6 $502.9 PER SHARE (EPS) $73.5 $65.5 - Year-to-date revenue of $502.9
Slide 21: Reporting Segments
REPORTING SEGMENTS
Slide 22: 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 23: 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 - Cooling Systems/Cooling o Farm Crops - Towers ©2024 Hawkins, Inc
Slide 24: Differentiators
DIFFERENTIATORS ▪ Large Geographic Territory - Locations in 49 Cities in 26 States ▪ Full Line Product Offering - Chemistries and Equipment ▪ Route Sales/Service Business Model - Technical Application Specialists ©2024 Hawkins, Inc. 24
Slide 25: Water Treatment Financials (in Millions)
WATER TREATMENT FINANCIALS (IN MILLIONS) SALES (23% CAGR) GROSS PROFIT (24% CAGR) $363.3 $304.9 $98.5 $228.1 $67.2 $159.9 $170.0 $54.6 $41.9 $46.8 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 SG&A (23% CAGR) OPERATING INCOME (25% CAGR) $45.3 $53.2 $35.7 $31.4 $24.5
Slide 26: 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 27: Focus Areas
FOCUS AREAS • Pharmaceutical • Industrial/Manufacturing • Sugars • Mining and Oil Fields • Excipients • Metal Salts • Phosphates • Cleaners and Acids • Cleaners, Acid, Alkaline • Plating Additives • Food and Beverage • Agriculture • Preservatives • Fertilizers • Dairy Processing Aids • Crop Preserva
Slide 28: Differentiators
DIFFERENTIATORS ▪ Technical Knowledge ▪ Services Include: - 85+ 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: Industrial Financials (in Millions)
INDUSTRIAL FINANCIALS (IN MILLIONS) GROSS PROFIT (15% CAGR) SALES (10% CAGR) $470.8 $409.5 $68.1 $67.5 $386.9 $59.6 $275.2 $273.4 $43.3 $38.9 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 SG&A (4% CAGR) OPERATING INCOME (28% CAGR) $28.1 $28.3 $42.4 $39.2 $27.0 $31.5
Slide 30: 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 31: Focus Areas
FOCUS AREAS - Energy, Immunity, and - Minerals Cognition Ingredients - Oils/Oil Powders - Amino Acids - Fibers - Antioxidants - Probiotics - Botanicals - Plant Proteins - Enzymes - Vitamins - Joint Products ©2024 Hawkins, Inc. 31
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: Innovations & Global Brand Partners
INNOVATIONS & GLOBAL BRAND PARTNERS ©2024 Hawkins, Inc. 33
Slide 34: Health and Nutrition Financials (in Millions)
HEALTH AND NUTRITION FINANCIALS (IN MILLIONS) SALES (9% CAGR) GROSS PROFIT (8% CAGR) $153.5 $159.5 $159.4 $33.6 $32.3 $146.4 $29.8 $27.6 $105.1 $20.1 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 OPERATING INCOME SG&A (1% CAGR) (25% CAGR) $17.2 $16.5 $16.4 $15.8 $15
Slide 35: Summary
SUMMARY
Slide 36: 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 37: Appendix
APPENDIX
Slide 38: 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 39: 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 40: Non-GAAP Measures
NON-GAAP MEASURES ADJUSTED EBITDA* Trailing 12- Fiscal month (in thousands) 2020 2021 2022 2023 2024 9/29/24 Net Income $28,367 $40,980 $51,542 $60,041 $75,363 $81,714 Interest expense, net 2,511 1,467 1,404 5,234 4,282 5,107 Income tax expense 10,589 14,871 18,437 22,541 25,782 27,447 Amortization
Slide 41: Celebrating 85+ Years of Serving Our Customers
Celebrating 85+ 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