Investment research report for HWKN

Table of Contents

Executive Summary
Valuation Analysis
Industry and Competitors Analysis
Financial Analysis
Earnings Call Multi-Year Analysis
Financial Statements Multi Year
Insider Trading Analysis
Management Compensation Benchmark Analysis
Proxy Statement Analysis
News Analysis
Technical Indicators Analysis
Financial Statements Annual
Financial Statements Quarterly
Earnings Call Analysis

Executive Summary

Company Description:

Hawkins, Inc. (HWKN) is a leading specialty chemical company operating in the industrial, water treatment, and health and nutrition markets. With a history spanning over 80 years, the company has established a strong presence across multiple states through strategic acquisitions and organic growth initiatives.

Financial Performance and Growth Prospects:

Hawkins has demonstrated consistent revenue and profit growth over the past few years, driven by strategic acquisitions, higher selling prices, and strong demand across its segments, particularly Water Treatment. The company has effectively managed costs and expanded its gross profit margins, contributing to robust operating cash flows. Hawkins maintains a strong balance sheet with manageable debt levels, providing financial flexibility for future growth initiatives.

Competitive Positioning and Shareholder Friendliness:

While Hawkins operates in niche segments of the specialty chemicals market, its financial metrics do not particularly stand out versus peers, suggesting no clear durable competitive advantage. However, the company’s diversified product portfolio across diverse end-markets provides some diversification benefits. Hawkins has consistently returned capital to shareholders through share repurchases and increasing dividends, demonstrating its commitment to creating shareholder value.

Valuation and Investment Considerations:

Hawkins’ forward P/E based on analyst estimates appears reasonable for the projected growth, though price/free cash flow multiples suggest the stock may be richly valued relative to its cash flows. Insider trading patterns indicate a cautiously optimistic outlook from the company’s leadership, which could be of interest to both long-term and short-term investors. However, investors should also consider other factors, such as the company’s financial performance, market conditions, and industry trends, when making investment decisions.

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Valuation Analysis

PE Ratio

  • Low: -14.305054622925521
  • Base: 10.794353412218456
  • High: 35.89376144736244

PB Ratio

  • Low: 1.5489143635025475
  • Base: 2.205939718784224
  • High: 2.8629650740659005

EPS Growth

  • Low: 20.70%
  • Med: 22.72%
  • High: 24.48%

DPS Growth

  • Low: 2.26%
  • Med: 5.05%
  • High: 7.30%

Unable to provide price targets since this company’s financials are highly unstable. We recommend not to hold this stock in your portfolio.

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Industry and Competitors Analysis

Competitive Landscape

Based on the information provided, HWKN (Hawkins, Inc.) operates in the specialty chemicals industry. The key competitors mentioned are:

  1. H.B. Fuller Company (FUL)
  2. Minerals Technologies Inc. (MTX)
  3. Quaker Chemical Corporation (KWR)
  4. Oil-Dri Corporation of America (ODC)
  5. Sensient Technologies Corporation (SXT)
  6. Innospec Inc. (IOSP)
  7. Northern Technologies International Corporation (NTIC)

These companies are involved in various segments of the specialty chemicals market, including industrial chemicals, water treatment, health and nutrition, adhesives, sealants, coatings, refractories, metal extraction, oilfield services, and rust and corrosion inhibitors.

Competitive Positioning

In terms of competitive positioning, HWKN appears to be a relatively smaller player compared to some of the larger competitors like FUL, MTX, SXT, and IOSP, based on its market capitalization and revenue figures. However, it operates in specific niche segments such as industrial chemicals, water treatment, and health and nutrition, which could provide it with a competitive advantage in those areas.

HWKN’s financial metrics, such as gross profit ratio, EBITDA ratio, operating income ratio, and net income ratio, are generally in line with or slightly lower than some of its competitors, suggesting a moderate competitive position within the industry. However, a more detailed analysis of market share, product differentiation, and competitive strategies would be required to fully assess HWKN’s competitive positioning relative to its peers.

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Chart of Competitors

"Chart of Competitors"

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Financial Analysis

Financial Strength

The company has maintained a healthy current ratio above 1.9 in recent years, indicating good liquidity position. Debt levels seem reasonable with debt/equity ratio mostly below 0.5, though it has increased somewhat over the years. Interest coverage ratio has been strong, mostly above 10x, suggesting ability to comfortably service debt obligations.

Growth Potential

Revenue growth has been uneven, with some years showing decent growth and others declines. The 3-year revenue growth per share has been positive but modest. Operating cash flow growth has been volatile but the 3-year operating CF growth per share shows an improving trend in recent years. Earnings growth has also been inconsistent year-over-year, though analyst estimates project decent EPS growth over the next 2 years.

Competitive Advantage

The company operates in specialty chemicals across diverse end-markets like industrial, water treatment, and health/nutrition, providing some diversification benefits. However, financial metrics like operating margins and returns on capital do not particularly stand out versus peers, suggesting no clear durable competitive advantage.

Management Quality

Management has been able to maintain a solid financial position and generate positive free cash flows most years. However, the inconsistent revenue/earnings growth trajectory points to potential execution issues or external challenges the company has faced.

Shareholder Friendliness

The company pays a modest dividend, with a payout ratio around 20-30% in recent years. Share buybacks do not seem to be a priority based on the data. Returns on equity have been relatively low in the 3-6% range for the most part.

Valuation

The forward P/E based on analyst estimates is around 20x, which seems reasonable for the growth projected. However, price/free cash flow multiples appear quite high, suggesting the stock may be richly valued relative to its cash flows.

In summary, Hawkins appears to be a financially stable company with decent growth prospects, though it lacks a clear durable competitive advantage. Management seems shareholder-friendly through the dividend policy. Overall valuation looks fair based on earnings estimates but may be stretched relative to cash flow multiples.

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Chart of Key Per Share Metrics

"Chart of Key Per Share Metrics"

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Chart of Absolute Metrics

"Chart of Absolute Metrics"

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Earnings Call Multi-Year Analysis

The company has not held any earnings calls in the past few years, making it difficult to conduct a comprehensive multi-year analysis. Without access to the transcripts or recordings of these calls, it is challenging to assess the company’s historical performance, management’s commentary, and any insights that could be gleaned from these events.

Key Takeaways and Implications

Due to the lack of available earnings call data, there are no meaningful key takeaways or implications that can be derived from a multi-year analysis. The absence of this information makes it challenging to evaluate the company’s communication with investors, its transparency, and any potential trends or patterns that could inform the overall financial analysis.

Recommendations and Future Considerations

Without the necessary earnings call data, it is not possible to provide any meaningful recommendations or considerations for the future. The company’s decision to forgo these investor communication events limits the ability to gain a deeper understanding of its financial performance, strategic direction, and management’s perspective on the business.

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Financial Statements Multi Year

Revenue and Profit Growth

Hawkins has demonstrated consistent revenue and profit growth over the past few years, driven by strategic acquisitions, higher selling prices, and strong demand across its segments, particularly Water Treatment.

Acquisitions and Expansion

The company has actively pursued an acquisition strategy, making several strategic acquisitions in the Water Treatment segment to expand its geographic reach, product offerings, and manufacturing capabilities. These acquisitions have contributed significantly to revenue and profit growth.

Margin Expansion

Hawkins has been able to expand its gross profit margins over time, despite rising raw material costs, by effectively managing costs and shifting towards higher-margin products and segments.

Strong Cash Flow and Balance Sheet

The company generates robust operating cash flows, which it has used to fund acquisitions, capital expenditures, share repurchases, and dividends. Hawkins maintains a strong balance sheet with manageable debt levels, providing financial flexibility for future growth initiatives.

Shareholder Returns

Hawkins has consistently returned capital to shareholders through share repurchases and increasing dividends, demonstrating its commitment to creating shareholder value.

Segment Performance

While the Industrial and Water Treatment segments have been the primary growth drivers, the Health and Nutrition segment has also contributed to overall growth, particularly during periods of high demand for health and immunity products.

Overall, Hawkins’ financial statements reflect a well-managed company with a successful growth strategy, strong operational execution, and a disciplined approach to capital allocation. These factors position the company favorably for long-term value creation and should be attractive to long-term investors.

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Insider Trading Analysis

Over the past 5 years, there have been a total of 48 insider transactions, including 26 purchases and 22 sales. The CEO has been involved in 12 transactions, with 8 purchases and 4 sales. The CFO has been involved in 8 transactions, with 4 purchases and 4 sales.

In the most recent 12 months, there have been 10 insider transactions, including 6 purchases and 4 sales. The CEO has made 3 purchases and 1 sale during this period. The CFO has made 2 purchases and 1 sale during this period.

Implications for Investors

The long-term pattern of insider trading, with more purchases than sales, suggests that insiders are generally optimistic about the company’s long-term prospects. The recent increase in insider purchases, particularly by the CEO and CFO, may indicate that they believe the company’s stock is undervalued and presents a good investment opportunity for long-term investors. However, investors should also consider other factors, such as the company’s financial performance, market conditions, and industry trends, when making investment decisions.

Overall, the insider trading patterns at Hawkins, Inc. suggest a cautiously optimistic outlook from the company’s leadership, which could be of interest to both long-term and short-term investors. However, it is essential to conduct further research and analysis to make informed investment decisions.

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Management Compensation Benchmark Analysis

Alignment with Shareholder Value

On average, the base salary portion of total compensation for HWKN executives is 43.14%, which is higher than the average for the other companies (FUL at 37.48%, MTX at 27.79%, KWR at 41.33%, ODC at 51.52%, and SXT at 22.32%). This suggests that HWKN’s executive compensation structure may not be as closely aligned with creating long-term shareholder value compared to some of the other companies.

Incentive-Based Compensation

HWKN executives receive a significant portion of their total compensation through incentive plan compensation, ranging from 24.30% to 41.07% across the reported years. This indicates that a meaningful part of their pay is tied to the company’s performance, which can help align their interests with those of shareholders.

Lack of Bonuses

None of the HWKN executives received any bonuses in the reported years, which is different from the compensation structures of some of the other companies (e.g., FUL, KWR) where bonuses were a component of total compensation.

Consistent Compensation Structure

HWKN’s executive compensation approach appears to be relatively consistent across the reported years, with the base salary portion and incentive-based compensation remaining relatively stable.

In summary, while HWKN’s executive compensation structure may not be as closely aligned with long-term shareholder value creation as some of the other companies, the consistent approach and significant incentive-based compensation could be viewed positively by long-term investors. However, the lack of bonuses may be a point of difference compared to industry peers.

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Proxy Statement Analysis

Pay Close Attention to the Election of Directors (Item 1)

The board of directors plays a crucial role in overseeing and aligning executive compensation with long-term value creation. As a long-term investor, it is important to pay close attention to the election of directors and ensure that the board members have the necessary expertise and commitment to effectively fulfill this responsibility.

Ratification of the Independent Auditor (Item 2)

The ratification of the independent auditor is important for ensuring proper review and disclosure of executive compensation practices. This process helps to maintain the integrity and transparency of the company’s financial reporting, which is essential for investors to make informed decisions.

Say-on-Pay Vote (Item 3)

The say-on-pay vote allows shareholders to express their views on the overall executive compensation program and its alignment with long-term performance. As an investor, it is important to evaluate the compensation mix, performance metrics, goal-setting rigor, and pay-for-performance alignment to ensure that the executives are being compensated in a way that promotes long-term shareholder value creation.

Say-When-on-Pay Vote (Item 4)

The say-when-on-pay vote allows shareholders to determine the frequency of future say-on-pay votes, which can impact oversight and accountability. This vote is an important tool for investors to ensure that the company’s executive compensation practices are subject to regular review and adjustment as needed.

Without more specific details on the company’s compensation plan design, performance metrics, and payouts, it is difficult to confidently conclude whether the executives are compensated in a way that promotes long-term shareholder value creation. However, the items mentioned above provide key areas for long-term investors to scrutinize and ensure proper oversight and incentive alignment.

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News Analysis

Positive Sentiment

Hawkins has been consistently growing through strategic acquisitions, expanding its water treatment and specialty chemical footprint across multiple states like Maryland, Louisiana, Alabama, Tennessee etc. This inorganic growth strategy could drive future revenue and earnings growth.

The company has been reporting generally positive financial results, with earnings frequently beating analyst estimates in recent quarters. This demonstrates strong execution.

Hawkins has been raising its quarterly cash dividend consistently over the years, a positive signal for income investors. The dividend was most recently increased by 7% in August 2023.

The stock has hit new 52-week highs multiple times over the past year, indicating positive market sentiment and stock price momentum.

Analysts have been raising earnings estimates and price targets for Hawkins, seeing further upside potential.

Potential Concerns

Some quarters have seen revenues miss expectations, which could raise concerns about slowing demand or pricing pressures in Hawkins’ end-markets.

The chemical and specialty materials industry can be cyclical, so Hawkins’ growth may face headwinds during economic downturns impacting industrial demand.

Overall, the sentiment seems fairly positive, with Hawkins executing well on an acquisition-led growth strategy, maintaining dividend increases, and analysts remaining optimistic on the stock’s prospects. However, investors should monitor industry conditions and any potential slowdown in Hawkins’ end-markets that could impact future performance.

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Technical Indicators Analysis

Next Week Trading

The recent price action and technical indicators suggest a potentially volatile trading week ahead. The 20-day TEMA is above the current price, indicating a short-term bullish trend. However, the 10-day RSI is in the neutral range, suggesting the stock may consolidate or experience some pullback in the near term. Traders should watch for potential resistance around the recent highs and support around the 20-day SMA.

Resistance and Support Levels

The key resistance levels to watch are around $89-$90, which correspond to the recent highs. The 20-day SMA at $87.66 and the 50-day SMA at $81.64 could provide support if the stock pulls back. The 200-day SMA at $69.20 is a longer-term support level to monitor.

Short-Term Investor

The short-term technical picture is mixed. The rising TEMA and strong RSI suggest bullish momentum, but the stock may need to consolidate or pull back in the near term before potentially resuming its uptrend. Short-term investors should look for opportunities to enter on dips towards support levels, with a focus on the 20-day SMA.

Long-Term Investor

For long-term investors, the overall trend appears bullish. The stock has been trading above its 50-day and 200-day SMAs, indicating a strong upward trend. The rising ADX also suggests increasing trend strength. Long-term investors may consider this stock as a potential addition to their portfolio, with a focus on the long-term fundamentals and growth prospects of the company.

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Chart of Valuation History

"Chart of Valuation History"

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Financial Statements Annual

Financial Statements Annual 2024 Q2

Strong Financial Performance

Sales increased 21% to $935.1 million, driven by higher selling prices. Gross profit increased 13% to $165.1 million, with gross profit margins of 17.7%. Operating income increased 24% to $88.2 million, with an operating margin of 9.4%. Net income increased 16% to $60.0 million, with diluted earnings per share of $2.86.

Segment Performance

The Industrial segment sales increased 22% to $470.8 million, with gross profit up 14% to $681.0 million. The Water Treatment segment sales increased 34% to $304.9 million, with gross profit up 23% to $672.0 million. The Health and Nutrition segment sales were flat at $159.4 million, with gross profit down 8% to $298.0 million.

Liquidity and Capital Resources

Cash provided by operating activities was $174.0 million, up $346 million from the prior year. Capital expenditures were $483 million, primarily for new trucks and facility improvements. The company repaid $140 million in debt and paid $120 million in dividends. Cash balance increased $41 million to $76 million.

Acquisitions and Divestitures

The company sold certain assets related to its consumer bleach packaging business for $7 million, realizing a $3 million gain. No new acquisitions were completed in fiscal 2023, compared to $215 million spent on acquisitions in the prior year.

Shareholder Returns

The company repurchased $66 million of its common stock, with 1.1 million shares remaining authorized for repurchase. The company paid $120 million in dividends, an increase of 8% from the prior year.

Overall, Hawkins delivered strong financial results in fiscal 2023, driven by growth in its Industrial and Water Treatment segments, while managing costs and capital allocation effectively. The company continues to focus on strategic acquisitions and shareholder returns.

Financial Statements Annual 2023 Q2

Strong Revenue Growth

Hawkins reported a 30% increase in sales to $774.5 million in fiscal 2022, driven by growth across all three of its segments – Industrial, Water Treatment, and Health and Nutrition.

Improved Profitability

Gross profit increased 18% to $146.5 million, though gross margin declined from 20.7% to 18.9% due to rising raw material costs. Operating income grew 27% to $71.2 million.

Acquisitions Expanding Footprint

Hawkins made three acquisitions in its Water Treatment segment in fiscal 2022, adding operations in Texas, Alabama, and Georgia/Florida. These acquisitions are expected to further expand the company’s geographic reach and customer base.

Solid Cash Flow and Balance Sheet

Operating cash flow remained strong at $428 million, though it declined slightly from the prior year. The company ended the year with $35 million in cash and $120 million in total debt, providing financial flexibility for future investments and acquisitions.

Shareholder Returns

Hawkins returned $111 million to shareholders through dividends and repurchased $85 million of its own shares in fiscal 2022, demonstrating its commitment to creating shareholder value.

Overall, Hawkins delivered robust financial performance in fiscal 2022, leveraging its diverse product portfolio, strategic acquisitions, and operational excellence to drive growth and profitability despite a challenging cost environment. The company appears well-positioned to continue executing on its long-term strategy.

Financial Statements Annual 2022 Q2

Strong financial performance in fiscal 2021

Sales increased 10% to $596.9 million, driven by growth across all three segments. Gross profit increased 23% to $123.8 million, with gross margin expanding to 20.7% from 18.7% in the prior year. Operating income increased 34% to $55.9 million, with the operating margin improving to 9.4% from 7.7%. Net income grew 44% to $41.0 million, with diluted EPS increasing to $1.93 from $1.33.

Segment performance

The Industrial segment saw a 1% decline in sales but a 11% increase in gross profit, driven by a shift to higher-margin manufactured and repackaged products. The Water Treatment segment had a 6% increase in sales and a 12% increase in gross profit, benefiting from the acquisitions of ADC and CL Aqua. The Health and Nutrition segment had a 46% increase in sales and a 68% increase in gross profit, driven by strong demand for health and immunity products.

Strong cash flow and balance sheet

Cash provided by operating activities was $438 million, though down from $589 million in the prior year. The company used $714 million in investing activities, primarily for acquisitions and capital expenditures. Debt increased to $134.7 million as of March 28, 2021, up from $59.7 million a year earlier, to fund the acquisitions. The company maintained a strong balance sheet with $302.6 million in shareholders’ equity.

Acquisitions and expansion

The company acquired ADC, CL Aqua, and a manufacturing facility in Rosemount, Minnesota to expand its Water Treatment and Industrial segments. These acquisitions added $25 million in annualized revenue and expanded the company’s geographic reach and manufacturing capabilities.

Overall, Hawkins delivered strong financial results in fiscal 2021, with growth across its segments and strategic acquisitions to enhance its capabilities and market position. The company maintained a healthy balance sheet to support its growth initiatives.

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Financial Statements Quarterly

Financial Statements Quarterly 2024 Q2

Acquisitions and Expansion

Hawkins made three strategic acquisitions in fiscal 2024 – Miami Products, Water Solutions, and EcoTech. These acquisitions added approximately $66 million in annual revenue and expanded Hawkins’ presence in the water treatment market. The acquisitions contributed to a 20% increase in Water Treatment segment sales and a 44% increase in gross profit for that segment in the first nine months of fiscal 2024. Hawkins continues to pursue a growth strategy through acquisitions and investments to complement its existing businesses.

Profitability and Margins

Gross profit increased 16% in Q3 and 14% in the first nine months, driven by the LIFO benefit from declining raw material costs and improved margins in the Water Treatment segment. Operating income increased 21% in both Q3 and the first nine months, demonstrating Hawkins’ ability to effectively manage costs and drive profitability. The company’s operating income margin improved from 9.9% to 12.1% in the first nine months, indicating strong operational efficiency.

Cash Flow and Capital Allocation

Cash flow from operations increased significantly year-over-year, driven by working capital improvements and higher net income. Hawkins continues to invest in capital expenditures, including a $51 million expansion project, to support its growth initiatives. The company has an active share repurchase program, having bought back $113 million of shares in the first nine months of fiscal 2024. Hawkins maintains a strong balance sheet with ample liquidity and manageable debt levels, providing financial flexibility for future investments and acquisitions.

Segment Performance

The Water Treatment segment has been a key driver of growth, with sales and gross profit increasing 18% and 44%, respectively, in the first nine months. The Industrial segment faced some headwinds, with sales declining 12% due to the sale of the consumer bleach packaging business and lower volumes, though gross profit remained relatively flat. The Health and Nutrition segment experienced a decline in sales and gross profit, highlighting the need for Hawkins to continue diversifying its revenue streams.

Overall, Hawkins’ financial performance demonstrates its ability to execute on its growth strategy through strategic acquisitions, operational efficiency, and prudent capital allocation. The company’s strong cash flow generation and balance sheet provide a solid foundation for future expansion and shareholder value creation.

Financial Statements Quarterly 2024 Q1

Revenue and Profitability

Hawkins’ revenue remained relatively flat year-over-year, with a slight decrease of 0.1% for the six-month period. This was due to declines in the Industrial and Health & Nutrition segments, offset by growth in the Water Treatment segment.

Gross profit increased 14% for the six-month period, driven by improved margins across the business. This was primarily due to decreasing raw material costs, which allowed Hawkins to expand its gross profit margins.

Operating income increased 20% for the six-month period, demonstrating Hawkins’ ability to effectively manage its operating expenses and leverage its improved gross margins.

Segment Performance

The Water Treatment segment was the standout performer, with an 18% increase in revenue and a 41% increase in gross profit for the six-month period. This was driven by higher selling prices and increased sales volumes.

The Industrial segment saw an 8% decline in revenue, but was able to maintain relatively flat gross profit margins through effective cost management.

The Health & Nutrition segment experienced a 12% decline in revenue and an 18% decline in gross profit, due to lower demand for specialty distributed products.

Cash Flow and Capital Allocation

Hawkins generated strong operating cash flow of $92.6 million in the first six months, a significant improvement over the prior year period.

The company used this cash flow to fund capital expenditures of $16.9 million and make an acquisition of EcoTech Enterprises for $34 million.

Hawkins also continued its share repurchase program, buying back $9.8 million worth of shares in the first six months.

Acquisitions and Divestitures

The acquisition of EcoTech Enterprises in the Water Treatment segment demonstrates Hawkins’ strategy of expanding its capabilities through targeted M&A.

The divestiture of the consumer bleach packaging business in the Industrial segment shows Hawkins’ focus on its core operations and product lines.

Overall, Hawkins’ financial performance in the first half of fiscal 2024 was solid, with the company demonstrating its ability to navigate market challenges, expand margins, and allocate capital effectively. The Water Treatment segment’s strong performance and the company’s acquisition activity suggest Hawkins is well-positioned for continued growth and value creation.

Financial Statements Quarterly 2023 Q4

Revenue Growth

Hawkins’ total revenue increased by 2% year-over-year to $251.1 million, driven by higher selling prices across its segments, particularly in the Water Treatment segment.

Segment Performance

  • Industrial segment revenue decreased 3% due to the divestiture of the consumer bleach packaging business, partially offset by higher selling prices.
  • Water Treatment segment revenue increased 19% due to higher selling prices.
  • Health and Nutrition segment revenue decreased 15% due to lower sales volumes of specialty distributed products and manufactured products.

Gross Profit Margin Expansion

Gross profit increased 11% to $52.0 million, or 20.7% of sales, compared to 19.0% in the prior year period. This was driven by the favorable impact of changes in the LIFO reserve, particularly in the Industrial and Water Treatment segments.

Operating Income Growth

Operating income increased 16% to $32.5 million, or 12.9% of sales, reflecting the higher gross profit and disciplined expense management.

Cash Flow and Liquidity

Cash provided by operating activities was $34.9 million, compared to cash used of $9.4 million in the prior year period, driven by decreased cash used for inventory purchases and increased net income. The company had $70.0 million in cash and $88.3 million in net debt as of July 2, 2023.

Share Repurchases

Hawkins did not repurchase any shares during the quarter, but had 1.1 million shares remaining authorized for repurchase under its program as of July 2, 2023.

Overall, Hawkins demonstrated solid financial performance in the quarter, with revenue growth, gross margin expansion, and strong cash flow generation. The company’s diversified business model and focus on operational efficiency appear to be supporting its profitability.

Financial Statements Quarterly 2023 Q3

Strong revenue growth

The company saw a 17% increase in sales in the third quarter and a 28% increase in the first nine months of fiscal 2023 compared to the prior year periods. This was driven by higher selling prices across the Industrial, Water Treatment, and Health & Nutrition segments.

Profitability maintained despite cost pressures

Gross profit increased 7% in the third quarter and 17% in the first nine months, despite the negative impact of rising raw material costs that increased the LIFO reserve. The company was able to pass along higher costs to customers.

Operational efficiency

Operating income increased 7% in the third quarter and 24% in the first nine months, demonstrating the company’s ability to manage expenses. Selling, general, and administrative expenses as a percentage of sales declined from the prior year periods.

Acquisition integration

The company successfully integrated the acquisitions made in fiscal 2022, with the added businesses contributing to the revenue and earnings growth.

Strong cash flow and balance sheet

Operating cash flow increased 15% in the first nine months, providing the company with ample liquidity to fund capital expenditures, share repurchases, and potential future acquisitions. Debt levels remain manageable.

Shareholder-friendly actions

The company continued its share repurchase program, buying back $6.6 million in shares in the first nine months of fiscal 2023. The dividend was also increased.

Overall, the financial statements demonstrate Hawkins’ ability to navigate a challenging cost environment, integrate acquisitions, and generate strong cash flows – all of which should be attractive to long-term investors. The company’s diversified business model and focus on operational efficiency appear to be serving it well.

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Earnings Call Analysis

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The information provided on this blog is for informational purposes only and should not be considered as financial advice. You should consult with a qualified financial professional before making any investment decisions. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal.