Hawkins, Inc. · NASDAQ:HWKN
Hawkins — Investor Presentation (August 2023)
37 slides from Hawkins's investor presentation, Aug 2, 2023
Slide 1: Investor Presentation
Nasdaq: HWKN Investor Presentation FISCAL 2024, QUARTER 1 Published: August 2, 2023
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 ©2023 Hawkins, Inc. ©2023 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: Trailing Twelve Months Quarterly EPS
TRAILING TWELVE MONTHS QUARTERLY EPS 3.50 3.04 3.00 29% EPS 5-year CAGR 2.78 2.81 2.86 2.59 2.37 2.44 2.50 2.26 2.17 1.93 TTM EPS 2.00 1.72 1.56 1.33 1.43 1.50 1.26 1.28 1.14 1.18 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 FY19 FY20 FY21 FY22 FY23 FY24
Slide 6: Strong Track Record of Accretive Acquisitions
STRONG TRACK RECORD OF ACCRETIVE ACQUISITIONS 07/2023 EcoTech Enterprises in Arkansas (Water Treatment) 12/2021 NAPCO Chemical Company in Texas (Water Treatment) 11/2021 Water & Waste Specialties in Alabama (Water Treatment) 09/2021 Southeast Water Systems in Alabama (Water Treatment) 01/2021 C&L Aq
Slide 7: 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 8: 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 9: 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 10: 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 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 40 water treatment facilities, while adding one to
Slide 12: Locations
LOCATIONS 52 FACILITIES IN 25 STATES WITH 800+ EMPLOYEES ©2023 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 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 $24.4 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Slide 16: Fiscal 2024 First Quarter Financials
FISCAL 2024 FIRST QUARTER FINANCIALS REVENUE OPERATING INCOME 21st CONSECUTIVE QUARTER ($ Million) ($ Million) OF YEAR-OVER-YEAR OPERATING INCOME GROWTH $251.1 $32.5 $246.5 $27.9 - Record quarterly revenue of $251.1M, growth of Q1 FY23 Q1 FY24 Q1 FY23 Q1 FY24 2% over the prior year - Record quarterl
Slide 17: Reporting Segments
REPORTING SEGMENTS
Slide 18: 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 19: 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 20: 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 21: 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 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: Differentiators
DIFFERENTIATORS ▪ Large Geographic Territory - Locations in 40 Cities in 23 States ▪ Full Line Product Offering - Chemistries and Equipment ▪ Route Sales/Service Business Model - Technical Application Specialists ©2023 Hawkins, Inc. 23
Slide 24: 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 25: 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 26: 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 27: Product Categories
PRODUCT CATEGORIES - Energy, Immunity, and - Minerals Cognition Ingredients - Oils/Oil Powders - Amino Acids - Fibers - Antioxidants - Probiotics - Botanicals - Plant Proteins - Enzymes - Vitamins ©2023 Hawkins, Inc. 27
Slide 28: 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 29: 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 30: Key Brands
KEY BRANDS ©2023 Hawkins, Inc. 30
Slide 31: Summary
SUMMARY
Slide 32: 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 33: Appendix
APPENDIX
Slide 34: 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 35: 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 36: Non-GAAP Measures
NON-GAAP MEASURES Adjusted EBITDA * Trailing Twelve Months Ended (in thousands) July 2, 2023 July 3, 2022 Net income (GAAP) $ 63,776 $ 54,608 Interest expense 5,452 1,984 Income tax expense 24,310 19,541 Amortization of intangibles 6,836 6,639 Depreciation expense 21,153 18,114 * We define adjusted
Slide 37: Questions/Comments
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): [email protected]