FOR IMMEDIATE RELEASE
Patrick H. Hawkins
Chief Executive Officer
Roseville, MN 55113
Jeffrey P. Oldenkamp
Chief Financial Officer
HAWKINS, INC. REPORTS
FIRST QUARTER FISCAL 2018 RESULTS
Minneapolis, MN, August 8, 2017 – Hawkins, Inc. (Nasdaq: HWKN) today announced first quarter results for fiscal 2018. Sales of $133.7 million for the three months ended July 2, 2017 represented an increase of 1.8% from $131.4 million for the same period of the prior year. Net income was $5.8 million, or $0.55 per diluted share, compared to net income of $7.6 million, or $0.72 per diluted share, for the same period in fiscal 2017.
“Overall, we expected the first quarter to be impacted by investments to facilitate future growth, but gross margins were softer than expected, driven by continued raw material cost increases on one of our major commodities and the timing of passing these cost increases along to our customers. However, we are pleased with the results of our Water Treatment segment, with sales and operating income up approximately 7% on higher volumes of our specialized products and improved results in our equipment projects,” said Patrick Hawkins, Chief Executive Officer and President. “Our Health and Nutrition segment declined compared to the same period last year, but has shown improvement sequentially with increased sales and operating income for the second quarter in a row.”
Mr. Hawkins continued, “In our Industrial segment, overall volumes were up slightly from a year ago. However, operating results in this segment were impacted by the raw material cost increases and continued weak economic conditions in agricultural markets which resulted in lower fertilizer application rates.”
For the first quarter of fiscal 2018, Industrial segment sales were $64.0 million, an increase of $0.2 million, or 0.4%, from the same period of the prior year. The increase in sales dollars was driven primarily by higher per-unit costs on one of our major commodities, resulting in higher selling prices on certain products. Water Treatment segment sales were $38.2 million for the most recent quarter, an increase of $2.6 million, or 7.3%, from the same period of the prior year. Sales dollars increased as a result of increased sales volumes, most notably in our specialized products that carry higher per-unit selling prices, as well as an increase in equipment project revenues. Sales for our Health and Nutrition segment were $31.5 million for the current quarter, a decrease of $0.5 million, or 1.5%, from the same period of the prior year. Sales were in line with our expectations but were slightly unfavorable to the prior year, due to a strong quarterly sales performance for the comparable period of the prior year. Timing of orders in this segment can vary greatly depending on customer requirements, causing uneven sales patterns.
Company-wide gross profit for the first quarter of fiscal 2018 was $26.0 million, or 19.4% of sales, a decrease of $2.2 million from $28.2 million, or 21.5% of sales, for the same period of the prior year. In addition to an increase in the LIFO reserve which negatively impacted gross profit by $0.5 million year over year, the decrease in gross profit was due to planned cost increases to drive future growth, including accelerated depreciation of $0.6 million, a $0.5 million reclassification from selling, general and administrative (“SG&A”) expenses, raw material price increases and product mix changes.
Gross profit for the Industrial segment was $9.0 million, or 14.0% of sales, for the quarter, a decrease of $1.4 million from $10.4 million, or 16.3% of sales, for the same period of the prior year. The LIFO method of valuing inventory decreased gross profit by $0.4 million in the current year and had a nominal impact on gross profit for the same period of the prior year. Volumes were up slightly from a year ago, but the decrease in gross profit and gross profit as a percentage of sales was driven primarily by increased operating costs, a shift in product mix to more sales of products that have lower per-unit margins, and the unfavorable year-over-year impact of the LIFO reserve.
Gross profit for the Water Treatment segment was $11.2 million, or 29.3% of sales, for the three months ended July 2, 2017 compared to $10.6 million, or 29.8% of sales, for the same period of the prior year. The LIFO method of valuing inventory decreased gross profit by $0.1 million for the three months ended July 2, 2017 and had a nominal impact during the same
The following information was filed by Hawkins Inc (HWKN) on Wednesday, August 9, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.