On this page of StockholderLetter.com we present the latest annual shareholder letter from HAWKINS INC — ticker symbol HWKN. Reading current and past HWKN letters to shareholders can bring important insights into the investment thesis.
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6/18/2025 Letter Continued (Full PDF)
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More "Specialty Chemicals" Category Stockholder Letters
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HWKN Benford's Law Stock Score = 88
6/18/2025 Letter Continued (Full PDF)
•
More "Specialty Chemicals" Category Stockholder Letters•
HWKN Benford's Law Stock Score = 88HWKN Shareholder/Stockholder Letter Transcript:
Corporate Profile Hawkins, Inc. was founded in 1938 and is a leading water treatment and specialty ingredients company that formulates, manufactures, distributes and blends products for its Water Treatment, Industrial, and Health & Nutrition customers. We believe that we create value for our customers through superb service and support, quality products, personalized applications and trustworthy, creative employees. Our Water Treatment Group specializes in providing chemicals, products, equipment, services and solutions for potable water, municipal and industrial wastewater, industrial process water, mainly non-residential swimming pool water and agricultural water. Our Industrial Group specializes in providing industrial chemicals, products and services to industries such as agriculture, chemical processing, electronics, energy, food, pharmaceutical and plating. Our Health and Nutrition Group specializes in providing ingredient distribution, processing and formulation solutions to manufacturers of nutraceutical, functional food and beverage, personal care, dietary supplement and other nutritional food, health and wellness products. Financial Highlights March 30, 2025 (In thousands, except per share data) Operating Results Sales Net income Net income as a percent of sales EBITDA (non-GAAP) (1) 974,431 84,345 8.7% 167,490 Per Share Data Basic earnings Diluted earnings Cash dividends paid Shareholders equity Financial Position Cash and investments Total assets Total current and long-term debt Shareholders equity Financial Ratios Gross margin Operating margin Additional Information Weighted average number of shares outstanding basic Weighted average number of shares outstanding diluted (1) - Refer to the reconciliation provided for this non-GAAP financial measure. Fiscal Year Ended March 31, 2024 April 2, 2023 919,162 75,363 8.2% 143,027 935,098 60,041 6.4% 119,081 4.05 4.03 0.70 22.25 3.61 3.59 0.63 19.53 2.88 2.86 0.57 16.79 5,103 769,867 148,819 460,292 7,153 657,934 98,731 406,026 7,566 590,535 111,644 350,016 23.1% 12.2% 21.1% 11.3% 17.7% 9.4% 20,804 20,937 20,864 21,014 20,848 21,015 To Our Shareholders Fiscal 2025 was another excellent year for Hawkins, and another exciting year of growth. Our strong financial position allowed us to fund $87 million in acquisitions, invest $41 million in capital needs, repurchase $21 million of our stock, and pay $15 million in dividends to our shareholders. We achieved a milestone in fiscal 2025 when we passed $2 billion in market capitalization. Our stock price grew by 38% in fiscal 2025, following 82% growth in our stock price in calendar 2023 when we were recognized as the number one stock in Minnesota. We achieved a milestone in fiscal 2025 when we passed $2 billion in market capitalization. Health Sciences, and Industrial Solutions. Food & Health Sciences will represent our food, pharmaceutical, agriculture, and nutrition end markets. We believe this realignment of our segments better reflects the value our company provides to our customers and our evolution from a bulk commodity distributor into a specialty ingredients company. For the seventh year in a row, we generated record operating income, net income, diluted earnings per share (EPS), and adjusted EBITDA. We recorded record sales of $974 million and record adjusted EBITDA of $167 million in fiscal 2025. This strong run has delivered compounded annual EPS growth of 25% over the last five years. We continued to pay dividends in fiscal 2025, as we have done consistently since 1985. In fiscal 2025, we paid out dividends totaling $0.70 per share, representing an 11% increase over the prior year. We continued our focus on growing our Water Treatment Segment, with the completion of four acquisitions in fiscal 2025, and 14 over the last 5 years. As a result of our focus on growing this segment, our Water Treatment revenue and operating income have nearly tripled in the last 5 years, and Water Treatment is now our largest segment, comprising 46% of our total revenue. We believe that our Water Treatment business is well-positioned for additional growth and we expect additional expansion both organically and through thoughtful acquisitions in the coming years. Our long-term strategy of servicing our customers and meeting their needs is central to everything we do from excellent service, such as offering delivery 365 days a year, to providing high-quality products. Our products serve critical needs by providing clean, potable drinking water, providing high-purity crop nutrients, ensuring food and pharmaceutical products are safe, and meeting consumer s health and immunity needs. Our Industrial and Health & Nutrition segments continued to show strength, with double-digit operating income growth year-over-year despite declines in revenue. After the end of fiscal 2025, we realigned our reporting segments to reflect organizational changes and to reflect the way we manage our operations and allocate resources. Beginning in fiscal 2026, our new reporting units will be Water Treatment, Food & i This year alone, the chemicals we sold treated an estimated 6 trillion gallons of water, positively impacting the lives of over 40 million people. It s easy to forget the critical public health impacts of these vital products that safely and efficiently disinfect and purify our drinking water. We are proud to once again be one of Newsweek s America s Most Responsible Companies for the fifth year in a row, receive Fortune s designation for Best Workplaces for Manufacturing and Production, and be certified as a Great Place to Work. All of these point to the great work that is done every day by our employees, and I am honored to lead this company and am proud of what we have accomplished together. We are committed to being a responsible, sustainable supplier, to producing and distributing products that help keep the environment clean, to investing in our communities and to treating our employees fairly and ethically. I want to once again reassure you that the cornerstones that have been part of our DNA throughout our history and that guide our day-to-day actions and initiatives in support of our strategic goals remain unchanged: we strive every day to exceed customer expectations, to prioritize employee safety and engagement and operational excellence while driving profitable margin growth. All of these ultimately drive value to you, our shareholders. The most important relationships we have and the core of our business is our strong and reliant workforce. Our dedicated and committed employees ensure that we are able to safely and efficiently deliver our quality products to our customers when they need them. We are proud that all of our employees make at least $20 per hour, and the median employee earns more than $93,000 per year. We offer a package of robust employee benefits. Safety is always top of mind given the products we handle, and our focus on safety is evident in everything we do. Patrick H. Hawkins Chief Executive Officer and President We have always felt it was important to support the communities we serve. Over the past year we focused on charitable contributions that funded apprenticeships to new water treatment technicians. In addition, our key donation partners included YMCA, Wounded Warriors, Trust for Public Lands, American Rivers, American Red Cross, Feeding America, and American Rivers. We also provided support to local foundations for relief efforts for regional disasters, such as wildfires and hurricanes. ii Reconciliation of Non-GAAP Financial Measure We report our consolidated financial results in accordance with U.S. generally accepted accounting principles (GAAP). To assist investors in understanding our financial performance between periods, we have provided adjusted EBITDA, a financial measure not computed according to GAAP. This non-GAAP financial measure is 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 this non-GAAP financial measure internally to understand, manage and evaluate our business and to make operating decisions. Management believes that this non-GAAP financial measure reflects an additional way of viewing aspects of our 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. We define adjusted EBITDA as GAAP net income adjusted for the impact of the following: net interest expense resulting from our net borrowing position; income tax expense; non-cash expenses including amortization of intangibles, depreciation, and charges for the employee stock purchase plan and restricted stock grants; and nonrecurring items of income or expense, if applicable. A reconciliation of adjusted EBITDA to its most directly comparable financial measure calculated in accordance with GAAP is presented below: Adjusted EBITDA March 30, 2025 (In thousands) Net income (GAAP) Interest expense Income tax expense Amortization of intangibles Depreciation expense Non-cash compensation expense Non-recurring costs Adjusted EBITDA iii 84,345 5,432 30,038 12,764 27,184 6,498 1,229 167,490 Fiscal Year Ended March 31, 2024 75,363 4,282 25,782 8,539 23,264 4,880 917 143,027 April 2, 2023 60,041 5,234 22,541 6,924 20,516 3,825 119,081