FOR IMMEDIATE RELEASE
Jeffrey P. Oldenkamp
Chief Financial Officer
Roseville, MN 55113
HAWKINS, INC. REPORTS
SECOND QUARTER FISCAL 2018 RESULTS
Minneapolis, MN, November 1, 2017 – Hawkins, Inc. (Nasdaq: HWKN) today announced second quarter results for fiscal 2018. Sales of $125.4 million for the three months ended October 1, 2017 represented an increase of 3.4% from $121.3 million for the same period of the prior year. Net income was $5.2 million, or $0.49 per diluted share, compared to net income of $7.2 million, or $0.68 per diluted share, for the same period in fiscal 2017.
For the six months ended October 1, 2017, Hawkins reported sales of $259.1 million as compared to $252.6 million for the same period of the prior year. Net income for the first half of fiscal 2018 was $11.0 million, or $1.04 per fully diluted share, compared to $14.8 million, or $1.40 per fully diluted share, for the first half of fiscal 2017.
“Our second quarter and year-to-date results were negatively impacted by two key factors. The first key factor was investments made to facilitate future growth in all parts of our Company, and to comply with increased customer and regulatory requirements,” said Patrick Hawkins, Chief Executive Officer and President. “The investments in people and equipment were necessary for us to continue to offer best-in-class service and manufacturing operations. We believe most of these investments are behind us and we remain focused on controlling our costs. The second key factor impacting our results was rapidly rising material costs and competitive pressures that limited our ability to pass all of these cost increases along to our customers.”
Mr. Hawkins continued, “We have seen strong sales of certain higher margin specialty products that has offset some of the impact of competitive pricing pressures, and continue to work to expand our offerings to bring new applications and opportunities to market.”
For the second quarter of fiscal 2018, sales increased 3.4% to $125.4 million. Industrial segment sales were $58.7 million, an increase of $2.8 million, or 5.1%, from the same period of the prior year. Although overall sales volumes decreased, sales dollars increased due to a product mix shift to more sales of certain specialty products with higher per-unit selling prices, and, to a lesser extent, increased costs on one of our major commodities that resulted in higher selling prices on certain products. Water Treatment segment sales were $38.2 million for the most recent quarter, an increase of $1.4 million, or 3.7%, from the same period of the prior year. Sales dollars increased as a result of increased sales of our specialty products. Sales for our Health and Nutrition segment were $28.5 million for both the three months ended October 1, 2017 and the same period of the prior year. Increased sales of distributed products were offset by decreased sales of our manufactured products.
Company-wide gross profit for the second quarter of fiscal 2018 was $24.1 million, or 19.2% of sales, a decrease of $2.9 million from $27.0 million, or 22.3% of sales, for the same period of the prior year. As a result of raw material cost increases, the current year increase in the LIFO reserve reduced gross profit by $0.6 million year over year. The decrease in gross profit was further negatively impacted by investments in personnel and equipment to drive future growth, product mix changes and competitive pricing pressures.
Gross profit for the Industrial segment was $8.3 million, or 14.2% of sales, for the quarter, a decrease of $1.9 million from $10.2 million, or 18.2% of sales, for the same period of the prior year. Raw material cost increases negatively impacted the quarter with the LIFO method of valuing inventory decreasing gross profit by $0.2 million in the current year while increasing gross profit by $0.3 million for the same period of the prior year. In addition, gross profit and gross profit as a percentage of sales were impacted in the current quarter by increased operating costs as we invest for future growth and to comply with increased regulatory requirements. Increased profits from sales of certain higher-margin specialty products were offset by lower profits on certain commodity products due to competitive pricing pressures.
Gross profit for the Water Treatment segment was $11.0 million, or 28.9% of sales, for the three months ended October 1, 2017 compared to $11.1 million, or 30.0% of sales, for the same period of the prior year. Despite increased sales volumes and revenues, gross profit was down slightly from a year ago due to raw material cost increases and competitive pricing pressures.
The following information was filed by Hawkins Inc (HWKN) on Thursday, November 2, 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.