Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>HWKN reported better than expected fiscal second quarter (September) results with the caveat it would experience higher costs due to a supplier being offline in the December quarter</li>
<li>Downgrading from Buy to Neutral as this is the perfect time to move to the sidelines as some of the tailwinds of the last two years could become headwinds. </li>
<li>The weakness in industrial could become multi-quarter event with demand pressure due to higher prices and increased imports</li>
</ul>


HWKN reported better than expected fiscal second quarter (September) results with the caveat it would experience higher costs due to a supplier being offline in the December quarter
Downgrading from Buy to Neutral as this is the perfect time to move to the sidelines as some of the tailwinds of the last two years could become headwinds. 
The weakness in industrial could become multi-quarter event with demand pressure due to higher prices and increased imports


HWKN: Moving to Sidelines on Rise of Headwinds

<ul>
<li>The seasonal strength of the water treatment business should lead to Hawkins (HWKN) offsetting the sales decline from industrial specialty chemicals declining in price in the September quarter</li>
<li>There is now evidence some specialty chemical prices are beginning to decline. When there has been no LIFO charge, HWKN has reported gross margin above 20 percent.</li>
<li>Summer months are seasonally the time when there is greater demand from HWKN’s water treatment customers. Over the course of the past year HWKN has grown the segment through acquisitions</li>
</ul>


The seasonal strength of the water treatment business should lead to Hawkins (HWKN) offsetting the sales decline from industrial specialty chemicals declining in price in the September quarter
There is now evidence some specialty chemical prices are beginning to decline. When there has been no LIFO charge, HWKN has reported gross margin above 20 percent.
Summer months are seasonally the time when there is greater demand from HWKN’s water treatment customers. Over the course of the past year HWKN has grown the segment through acquisitions


<ul>
<li>HWKN reported fiscal first quarter (June) results where continued price increases resulted in the Company reporting higher sales and earnings compared to our estimates</li>
<li>HWKN operates a business where the increase in sales generates higher gross profit dollars with minimal change in operating expenses</li>
<li>HWKN reported sales of $246.5 million compared to our forecast of $209.9 million. A LIFO charge of $3.8 million was lower and led to EPS beating our estimate</li>
</ul>


HWKN reported fiscal first quarter (June) results where continued price increases resulted in the Company reporting higher sales and earnings compared to our estimates
HWKN operates a business where the increase in sales generates higher gross profit dollars with minimal change in operating expenses
HWKN reported sales of $246.5 million compared to our forecast of $209.9 million. A LIFO charge of $3.8 million was lower and led to EPS beating our estimate


<ul>
<li>Rising prices continued to have a positive impact for Hawkins (HWKN) in the March 2022 quarter</li>
<li>We had highlighted how the ongoing inflationary backdrop in commodities would benefit HWKN through higher liquid fertilizer sales, which is what occurred in the March quarter</li>
<li>The continuation of industrial segment pricing marching higher is unlikely, but such an event would reintroduce gross margins above 20 percent</li>
</ul>


Rising prices continued to have a positive impact for Hawkins (HWKN) in the March 2022 quarter
We had highlighted how the ongoing inflationary backdrop in commodities would benefit HWKN through higher liquid fertilizer sales, which is what occurred in the March quarter
The continuation of industrial segment pricing marching higher is unlikely, but such an event would reintroduce gross margins above 20 percent


<ul>
<li>HWKN benefited from rising specialty chemical prices to reach a new quarterly revenue record for its industrial segment.</li>
<li>The latest quarterly results show the benefits of HWKN’s diversified approach to specialty chemicals. </li>
<li>HWKN reported fiscal Q3 sales of $187.1 million and net income of $10.2 million, or $0.48 per share. We had been forecasting sales to reach $156.8 million in the quarter</li>
</ul>


HWKN benefited from rising specialty chemical prices to reach a new quarterly revenue record for its industrial segment.
The latest quarterly results show the benefits of HWKN’s diversified approach to specialty chemicals. 
HWKN reported fiscal Q3 sales of $187.1 million and net income of $10.2 million, or $0.48 per share. We had been forecasting sales to reach $156.8 million in the quarter


HWKN: Price and Volume Lead to New PT of $52

United States

Hawkins, Inc. formulates, manufactures, blends, distributes, and sells reagent grade laboratory chemicals and industrial chemicals.  The Company also provides water treatment equipment and chemicals to commercial and industrial entities. Hawkins services customers located in the Midwest United States.

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Hawkins Inc (HWKN US)

HWKN: Moving to Sidelines on Rise of Headwinds

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HWKN: Pricing the Expected

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HWKN: A Growth Story Continues

Higher selling prices have allowed HWKN to pass through inflationary pressures while preserving gross margin near 19 percent. The current...

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HWKN: Beat and Raise Quarter

Elevated demand within the industrial segment stemmed from farmers purchasing liquid fertilizer. Some of the gains also came from contract...

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HWKN: Price and Volume Lead to New PT of $52

Price and volume increases continued in the quarter beyond our forecasts. We are expecting continuation into the March quarter.

BWS Financial Inc

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