Hawkins, Inc. Reports Fourth Quarter, Fiscal 2013 Results

          Hawkins, Inc. Reports Fourth Quarter, Fiscal 2013 Results

PR Newswire

MINNEAPOLIS, May 29, 2013

MINNEAPOLIS, May29, 2013 /PRNewswire/ --Hawkins, Inc. (Nasdaq: HWKN) today
announced fourth quarter and full-year results for its fiscal year ended March
31, 2013. Sales of $350.4 million for fiscal 2013 represented an increase of
1.9% from $343.8 million for the prior fiscal year. Adjusted net income from
continuing operations was $23.6 million for the year, or $2.24 per share,
fully diluted, compared to $21.6 million, or $2.08 per share, fully diluted,
for fiscal 2012. Adjusted net income from continuing operations for fiscal
2013 excludes previously-announced pretax charges totaling $10.4 million
(approximately $6.5 million after tax, or $0.62 per share, fully diluted),
consisting of a pension withdrawal charge as well as a litigation settlement
charge. Including these items, net income from continuing operations for
fiscal 2013 was $17.1 million, or $1.62 per share, fully diluted (see
reconciliation table).

For the fourth quarter of fiscal 2013, the Company reported sales of $87.6
million as compared to $83.2 million for the same period a year ago. Net
income from continuing operations for the fourth quarter of fiscal 2013 was
$4.2 million, or $0.39 per share, fully diluted, compared to net income from
continuing operations of $3.3 million, or $0.34 per share, fully diluted, for
the same period in fiscal 2012. A decrease in our LIFO inventory reserve of
$0.6 million increased our earnings in the current quarter, while an increase
in our LIFO reserve of $1.8 million decreased our earnings in the same period
of the previous year.

"We recently completed significant infrastructure investments that better
position the Company for long-term growth. Our new Rosemount manufacturing and
warehousing facility began production in March and we moved our headquarters
into a newly leased building in April. We will continue manufacturing and
warehousing operations at our main location in Minneapolis, which had been the
home of our corporate headquarters for over 60 years. While we absorbed
additional costs in fiscal 2013 and will have additional incremental operating
and depreciation expenses from both projects in fiscal 2014, these investments
were necessary to position us for the future," said Patrick Hawkins, Chief
Executive Officer and President.

Mr. Hawkins continued, "Our Water Treatment segment increased its operating
income by 12% in fiscal 2013 compared to fiscal 2012. A good share of this
growth was fueled by favorable weather conditions during the first half of the
year. Over the past few years we have also worked to increase this group's
geographic coverage through additional sales personnel in existing branches
and by adding new locations. Our Industrial group's reported performance was
negatively impacted by the pension withdrawal and litigation settlement
charges in addition to absorbing the incremental costs of the Rosemount
facility. As we have discussed for several quarters now, the market
conditions for this group continue to be challenging. However, this group was
able to grow their overall volumes in fiscal 2013 and has worked hard to gain
business in this difficult environment."

For fiscal 2013, Industrial segment sales were $248.6 million, a decrease of
1.2% from fiscal 2012 sales of $251.5 million. While Industrial volumes
increased year-over-year, continued competitive pricing pressure resulted in
lower overall per-unit selling prices. Water Treatment segment sales were
$101.8 million for the year, an increase of 10.2% over last year's sales of
$92.4 million. The increase in sales was primarily due to volume growth
resulting from favorable weather conditions in the first half of fiscal 2013
and additional sales of bulk products. 

Company-wide gross profit for fiscal 2013 was $56.9 million, or 16.2% of
sales, compared to $65.9 million, or 19.2% of sales, for the prior year. Gross
profit was negatively impacted by the nonrecurring charges totaling $10.4
million, which charges together constituted 3.0% of sales for the fiscal year.
Additionally, gross profit was negatively impacted by $1.3 million of
incremental costs related to the new Rosemount facility and $0.4 million of
accelerated depreciation charges related to a facility we intend to vacate in
fiscal 2014. The LIFO method of valuing inventory increased gross profit by
$0.4 million for fiscal 2013, whereas it decreased gross profit by $1.6
million for the previous year.

Gross profit for the Industrial segment was $28.9 million, or 11.6% of sales,
for the year, as compared to $40.4 million, or 16.0% of sales, for the prior
year. Gross profit in this segment was negatively impacted primarily by the
nonrecurring charges, the Rosemount facility costs and the accelerated
depreciation mentioned above. Heightened competitive pricing pressures also
drove lower per-unit margins in this segment. Gross profit for the Water
Treatment segment was $28.1 million, or 27.6% of sales, for the year, as
compared to $25.5 million, or 27.6% of sales, for fiscal 2012. The increase
in gross profit dollars was primarily due to increased volumes resulting from
favorable weather conditions during the first half of fiscal 2013, partially
offset by a shift in product mix to increased sales of lower-margin bulk
products.

Company-wide SG&A expenses of $31.6 million increased $0.8 million for the
year as compared to the prior year primarily as a result of higher selling
costs due to additional sales staff expenses, partially offset by lower
administration costs.

Our effective income tax rate was 32.7% for fiscal 2013 compared to 38.6% for
fiscal 2012. During fiscal 2013, we amended previously filed U.S. Federal tax
returns resulting in an increase of $0.8 million in the benefits related to
the domestic manufacturing deduction and investment tax credits, which
positively impacted our tax rate for the year.

Hawkins, Inc. distributes, blends and manufactures bulk and specialty
chemicals for its customers in a wide variety of industries. Headquartered in
Roseville, Minnesota, and with 27 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:



            Three months ended March 31, 2013         Three months ended April1, 2012
            Incomefrom                 Diluted       Income from                 Diluted
(In                        Incomefrom                               Incomefrom
thousands,  continuing                  earningsper  continuing                  earningsper
except                     continuing   share from                   continuing   share from
share and   operations                  continuing    operations                  continuing
per share                  operations,  operations                   operations,  operations
data)       beforeincome  net of tax   (1)           beforeincome  net of tax   (2)
            taxes                                     taxes
As          $   5,985      $  4,165     $   0.39      $   5,643      $  3,273     $   0.32
Reported
Add Impact
of          —              —            —             —              —            —
Litigation
Settlement
Add Impact
of Pension  —              —            —             —              —            —
Withdrawal
As          $   5,985      $  4,165     $   0.39      $   5,643      $  3,273     $   0.32
Adjusted



(1) 10,568,079 shares used in calculating earnings per share.
(2) 10,450,584 shares used in calculating earnings per share.



            Fiscal year ended March 31, 2013          Fiscal year ended April 1, 2012
            Income from                 Diluted       Income from    Incomefrom  Diluted
(In                        Incomefrom
thousands,  continuing                  earningsper  continuing     continuing   earningsper
except                     continuing   share from                                share from
share and   operations                  continuing    operations     operations,  continuing
per share                  operations,  operations                   net of       operations
data)       beforeincome  net of tax   (3)           beforeincome  taxes        (4)
            taxes                                     taxes
As          $   25,414     $  17,108    $   1.62      $   35,254     $  21,628    $   2.08
Reported
Add Impact
of          3,200          1,990        0.19          —              —            —
Litigation
Settlement
Add Impact
of Pension  7,210          4,485        0.43          —              —            —
Withdrawal
As          $   35,824     $  23,583    $   2.24      $   35,254     $  21,628    $   2.08
Adjusted



(3) 10,541,142 shares used in calculating earnings per share.
(4) 10,408,573 shares used in calculating earnings per share.



HAWKINS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per-share data)
                        Three Months Ended          Fiscal Years Ended
                        March 31,                   March 31,
                                     April 1, 2012               April 1, 2012
                        2013                        2013
                        (unaudited)
Sales                   $  87,601    $   83,210     $  350,387   $   343,834
Cost of sales           (73,294)     (69,698)       (286,241)    (277,966)
Pension withdrawal      —            —              (7,210)      —
Gross profit            14,307       13,512         56,936       65,868
Selling, general and
administrative          (8,307)      (7,895)        (31,606)     (30,759)
expenses
Operating income        6,000        5,617          25,330       35,109
Investment income       (15)         26             84           145
(expense)
Income from continuing
operations before       5,985        5,643          25,414       35,254
income taxes
Income tax provision    (1,820)      (2,370)        (8,306)      (13,626)
benefit (expense)
Income from continuing  4,165        3,273          17,108       21,628
operations
Income from
discontinued            —            232            18           1,057
operations, net of tax
Net income              $  4,165     $   3,505      $  17,126    $   22,685
Weighted average
number of shares        10,495,268   10,395,138     10,464,820   10,339,391
outstanding-basic
Weighted average
number of shares        10,568,079   10,450,584     10,541,142   10,408,573
outstanding-diluted
Basic earnings per
share
Earnings per share
from continuing         $  0.40      $   0.32       $  1.64      $   2.09
operations
Earnings per share
from discontinued       —            0.02           —            0.10
operations
Basic earnings per      $  0.40      $   0.34       $  1.64      $   2.19
share
Diluted earnings per
share
Earnings per share
from continuing         $  0.39      $   0.32       $  1.62      $   2.08
operations
Earnings per share
from discontinued       —            0.02           —            0.10
operations
Diluted earnings per    $  0.39      $   0.34       $  1.62      $   2.18
share
Cash dividends
declared per common     $  0.34      $   0.32       $  0.68      $   0.64
share



SOURCE Hawkins, Inc.

Website: http://www.hawkinsinc.com
Contact: Patrick H. Hawkins, Chief Executive Officer, 612/617-8524,
Patrick.Hawkins@HawkinsInc.com, or Kathleen P. Pepski, Chief Financial
Officer, 612/617-8571, Kathleen.Pepski@HawkinsInc.com