Hawkins, Inc. Reports Third Quarter, Nine Months Fiscal 2013 Results

Jan 30, 2013, 17:20 ET from Hawkins, Inc.

MINNEAPOLIS, Jan. 30, 2013 /PRNewswire/ -- Hawkins, Inc. (Nasdaq: HWKN) today announced third quarter and nine months results for fiscal 2013.  Sales of $85.5 million for the quarter ended December 30, 2012 represented an increase of 1.6% from $84.2 million in sales for the same period of the prior year.  Adjusted net income from continuing operations was $5.8 million, or $0.56 per share, fully diluted.  Adjusted net income from continuing operations for the three months ended December 30, 2012 excludes a pre-tax charge of $7.2 million (approximately $4.5 million after tax, or $0.43 per share, fully diluted) related to our anticipated withdrawal from a collectively bargained multiemployer pension plan during the third quarter of fiscal 2013.  Including the pension withdrawal charge, net income from continuing operations for the third quarter of fiscal 2013 was $1.3 million, or $0.13 per share, fully diluted, compared to net income from continuing operations for the same period of fiscal 2012 of $5.3 million, or $0.51 per share, fully diluted (see reconciliation table).

For the nine months ended December 30, 2012, Hawkins, Inc. reported sales of $262.8 million as compared to sales of $260.6 million for the same period a year ago. Adjusted net income from continuing operations for the first nine months of fiscal 2013 was $19.4 million, or $1.85 per share, fully diluted, compared to adjusted net income from continuing operations of $18.4 million or $1.76 per share, fully diluted, for the first nine months of fiscal 2012.  Fiscal 2013 adjusted earnings exclude pretax charges totaling $10.4 million (approximately $6.5 million after tax, or $0.62 per share, fully diluted), consisting of the pension withdrawal charge as well as a previously announced litigation settlement charge.  Including these charges, net income from continuing operations for the first nine months of fiscal 2013 was $12.9 million, or $1.23 per share, fully diluted (see reconciliation table).

"While we enjoyed significant sales growth in our Water Treatment segment, increased sales of lower-margin commodity products negatively impacted our margins," said Patrick Hawkins, Chief Executive Officer and President.  "Recognizing that our business has gone through similar cycles in the past, our Industrial segment continued to experience heightened competition, resulting in slightly lower sales and margins compared to the prior year."  Mr. Hawkins continued, "We also recorded a charge that negatively impacted our results for the quarter related to our anticipated withdrawal from a collectively bargained multiemployer pension plan.  The liability had increased significantly over the last few years, and we are pleased that our withdrawal will help to mitigate that risk going forward.  In addition, we are excited that the build-out of our new Rosemount facility is progressing well and we continue to target the end of fiscal 2013 for the start of production at this site."

For the quarter, Industrial segment sales were $63.1 million, a decrease of 1.0% from third quarter fiscal 2012 sales of $63.7 million.  The decrease was primarily due to a shift in product mix to more bulk products, which carry lower per-unit selling prices. Water Treatment segment sales were $22.4 million for the quarter, an increase of 9.8% over last year's third quarter sales of $20.4 million.  The increase in sales was primarily due to volume growth of lower-priced commodity products. 

Company-wide gross profit for the quarter was $8.1 million, or 9.5% of sales, compared to $15.7 million, or 18.6% of sales, for the same period in the prior year.  Gross profit was negatively impacted primarily by the pension withdrawal charge of $7.2 million. The LIFO method of valuing inventory decreased gross profit by $0.1 million for the three months ended December 30, 2012 whereas it increased gross profit by $0.6 million for the three months ended January 1, 2012.  Gross profit for the Industrial segment was $2.6 million, or 4.2% of sales, for the quarter, as compared to $10.2 million, or 16.0% of sales, for the same period in fiscal 2012.  Gross profit in this segment was negatively impacted primarily by the pension withdrawal charge and by incremental expenses of $0.3 million related to the new Rosemount facility. Gross profit for the Water Treatment segment was $5.5 million, or 24.5% of sales, for the quarter, as compared to $5.5 million, or 26.8% of sales, for the same period in fiscal 2012. Gross profit as a percentage of sales for this segment was negatively impacted by a shift in product mix to sales of more lower-margin commodity products. 

Company-wide SG&A expenses of $7.6 million increased $0.5 million for the quarter as compared to the same period of the prior year primarily as a result of higher selling costs due to additional sales staff expenses.

Our effective income tax rate was 33.4% for the nine months ended December 30, 2012, compared to 38.0% for the nine months ended January 1, 2012. The effective tax rate is generally impacted by projected levels of taxable income, permanent items, and state taxes. The reduction in our effective tax rate in the current fiscal year is primarily due to a $0.8 million non-recurring increase in the benefits recorded related to the domestic manufacturing deduction and investment tax credits.

Hawkins, Inc. distributes, blends and manufactures bulk and specialty chemicals for its customers in a wide variety of industries. Headquartered in Minneapolis, Minnesota, and with 25 facilities in 13 states, the Company creates value for its customers through superb customer service and support, quality products and personalized applications.

Reconciliation of Non-GAAP Financial Measures

The Company reports its consolidated financial results in accordance with U.S. generally accepted accounting principles (GAAP).  To assist investors in understanding the Company's financial performance between periods, the Company has provided certain non-GAAP financial measures, including adjusted net income from continuing operations and adjusted diluted earnings per share. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies.

Management uses these non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our financial condition and results of operations.

A reconciliation of each non-GAAP financial measure used in this release to its most directly comparable financial measure calculated in accordance with GAAP is presented below:

 

(In thousands, except share and per share data)

Three months ended December 30, 2012

Three months ended January 1, 2012

Income from continuing operations before income taxes

Income from continuing operations, net of tax

Diluted earnings per share (1)

Income from continuing operations before income taxes

Income from continuing operations, net of tax

Diluted earnings per share (2)

As Reported

$       544

$     1,348

$        0.13

$    8,542

$     5,285

$        0.51

Add Impact of Litigation Settlement

-

-

-

-

-

-

Add Impact of Pension Withdrawal 

7,210

4,485

0.43

-

-

-

As Adjusted

$    7,754

$     5,833

$        0.56

$    8,542

$     5,285

$        0.51

(1) 10,535,549 shares used in calculating earnings per share.

(2) 10,410,533 shares used in calculating earnings per share.

(In thousands, except share and per share data)

Nine months ended December 30, 2012

Nine months ended Janaury 1, 2012

Income from continuing operations before income taxes

Income from continuing operations, net of tax

Diluted earnings per share (3)

Income from continuing operations before income taxes

Income from continuing operations, net of tax

Diluted earnings per share (4)

As Reported

$  19,429

$   12,943

$        1.23

$  29,611

$   18,356

$        1.76

Add Impact of Litigation Settlement

3,200

1,990

0.19

-

-

-

Add Impact of Pension Withdrawal 

7,210

4,485

0.43

-

-

-

As Adjusted

$  29,839

$   19,418

$        1.85

$  29,611

$   18,356

$        1.76

(3) 10,528,150 shares used in calculating earnings per share.

(4) 10,403,711 shares used in calculating earnings per share.

 

HAWKINS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended

Nine Months Ended

(In thousands, except share and per-share data)

December 30,

January 1,

December 30,

January 1,

2012

2012

2012

2012

Sales

$         85,527

$      84,160

$       262,786

$    260,624

Cost of sales

(70,191)

(68,481)

(212,947)

(208,268)

Pension withdrawal

(7,210)

-

(7,210)

-

Gross profit

8,126

15,679

42,629

52,356

Selling, general and administrative expenses

(7,617)

(7,163)

(23,299)

(22,864)

Operating income

509

8,516

19,330

29,492

Investment income

35

26

99

119

Income from continuing operations before income taxes

544

8,542

19,429

29,611

Income tax provision benefit (expense)

804

(3,257)

(6,486)

(11,255)

Income from continuing operations

1,348

5,285

12,943

18,356

Income from discontinued operations, net of tax 

-

267

18

824

Net income

$           1,348

$        5,552

$         12,961

$      19,180

Weighted average number of shares outstanding-basic

10,474,214

10,332,480

10,454,669

10,320,810

Weighted average number of shares outstanding-diluted

10,535,549

10,410,533

10,528,150

10,403,711

Basic earnings per share

Earnings per share from continuing operations 

$             0.13

$          0.51

$             1.24

$          1.78

Earnings per share from discontinued operations 

-

0.03

-

0.08

Basic earnings per share

$             0.13

$          0.54

$             1.24

$          1.86

Diluted earnings per share

Earnings per share from continuing operations 

$             0.13

$          0.51

$             1.23

$          1.76

Earnings per share from discontinued operations 

-

0.02

-

0.08

Diluted earnings per share

$             0.13

$          0.53

$             1.23

$          1.84

Cash dividends declared per common share 

$                 -

$              -

$             0.34

$          0.32

 

SOURCE Hawkins, Inc.



RELATED LINKS

http://www.hawkinsinc.com