FOR IMMEDIATE RELEASE
Jeffrey P. Oldenkamp
Chief Financial Officer
Roseville, MN 55113
HAWKINS, INC. REPORTS
THIRD QUARTER FISCAL 2018 RESULTS
Minneapolis, MN, February 8, 2018 – Hawkins, Inc. (Nasdaq: HWKN) today announced third quarter results for fiscal 2018. Sales of $118.1 million for the three months ended December 31, 2017 represented an increase of 5.1% from $112.4 million for the same period of the prior year. Net income was $17.1 million, or $1.61 per diluted share, compared to net income of $3.6 million, or $0.34 per diluted share, for the same period in fiscal 2017. Net income for the current period included $14.3 million of income tax benefits, or approximately $1.34 per diluted share, recorded as a result of the Tax Cuts and Jobs Act (the Act”) which was signed into law on December 22, 2017 and discussed in more detail below. Net income for the three months ended December 31, 2017 adjusted for the impact of these tax benefits was $2.8 million, or $0.27 per diluted share.
For the nine months ended December 31, 2017, Hawkins reported sales of $377.2 million as compared to $365.0 million for the same period of the prior year. Net income for the first nine months of fiscal 2018 was $28.2 million, or $2.65 per fully diluted share, compared to $18.3 million, or $1.73 per fully diluted share, for the same period of fiscal 2017. Net income for the current year included a $13.2 million income tax benefit, or approximately $1.24 per diluted share, recorded as a result of the Act. Net income for the nine months ended December 31, 2017 adjusted for the impact of this tax benefit was $15.0 million, or $1.41 per diluted share.
“During the third quarter we were pleased to see stabilization in raw material costs and increased selling prices for our products. Both our Industrial and Water Treatment segments had continued year-over-year revenue growth, with the year-over-year decline in Industrial gross profit dollars being much less than in each of the first two quarters of the year,” said Patrick Hawkins, Chief Executive Officer and President. “In our Health and Nutrition segment, sales and margins of distributed products continued to grow; however, reduced sales of manufactured products negatively impacted the overall results. We are addressing these shortfalls by eliminating inefficiencies and focusing on plant core competencies. In addition, we are making a leadership change and Dan Stauber, who has more than 30 years experience with this business, will be re-assuming leadership of the Stauber organization as the Vice President of Health and Nutrition.”
Mr. Hawkins continued, “Fiscal 2018 has been a challenging year with raw material cost increases and competitive pressures limiting our ability to pass the full increase onto our customers, but it has resulted in the entire organization continuing to be very cost-focused while ensuring we deliver best-in-class service to our customers. This is having a direct, positive impact on our results of operations. Last quarter I stated that our results were negatively impacted by investments we had made to facilitate future growth in all parts of our Company, and to comply with increased customer and regulatory requirements. Those incremental investments are behind us, and our quarter- and year-to-date selling, general and administrative expenses were lower than the same period in the previous year. In addition, our operational overhead costs, while still higher year-over-year, were significantly lower on a comparative basis than the first two quarters of fiscal 2018.”
For the third quarter of fiscal 2018, sales increased 5.1% to $118.1 million from the prior year. Industrial segment sales were $60.3 million, an increase of $3.3 million, or 5.7%, from the same period of the prior year. Overall sales volumes decreased slightly, while sales dollars increased due to additional sales of certain specialty products with higher per-unit selling prices and higher selling prices on certain other products driven by cost increases on one of our major commodities. Water Treatment segment sales were $30.9 million for the most recent quarter, an increase of $2.8 million, or 9.9%, from the same period of the prior year. Sales dollars increased as a result of increased sales across many product lines. Sales for our Health and Nutrition segment were $26.9 million, a decrease of $0.3 million, or 1.2%, from the same period of the prior year. Increased sales of distributed products were offset by decreased sales of our manufactured products. The decline in sales of our manufactured products was due to reduced demand from certain customers and temporarily refocused efforts as we made investments to upgrade the facility to generate future growth.
Company-wide gross profit for the third quarter of fiscal 2018 was $18.8 million, or 16.0% of sales, a decrease of $2.1 million from $20.9 million, or 18.6% of sales, for the same period of the prior year. The current year increase in the LIFO reserve reduced gross profit by $1.1 million year over year as a result of raw material cost increases and projected increases in year-end
The following information was filed by Hawkins Inc (HWKN) on Thursday, February 8, 2018 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.