Hamilton Beach Brands Holding (HBB) 3 Aug 232023 Q2 Earnings call transcript

Thank you for standing by. At this time, I would like to welcome everyone to the Hamilton Beach Brands Holding Company Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

may conference. you Nabhan, Anne begin your Lou

Thank second and quarter Good morning, webcast. to our everyone. Welcome XXXX you, Sheryl. earnings conference call

XXXX copies are Yesterday, our on our our closed, market available with earnings quarter XX-Q Both after filed release SEC. we the website. and the second issued

Executive and speakers Officer. Chief Our Chief are Cunningham, Sally Trepp, Greg and today Financial Senior and President Officer; Vice President

differ subject Q&A. cause or today presentation includes to from Our actual risks could uncertainties that during These in are forward-looking expressed and to statements remarks results either materially those prepared statements. the the

Additional uncertainties annual which any update these earnings report updated our not these quarterly XXXX. year information our XX-K obligation release to conference be if call, Form XX, regarding disclaims the all. for risks is available at may until company statements, on and forward-looking our ended and and next XX-Q December in The

to the And over now turn Greg. I'll call

joining morning, we of Thank will take discuss our Good overview for will of your you, the next Lou performance an in the take financials XXXX detail. Anne. you more for everyone. of our Then, second year. us. minutes provide the expectations that, discuss the our Sally quarter I few to and After for remainder questions. Thank will

this discussed first half. soft a we As for our expected year calls we've but XXXX, the year, previous in a full solid performance

cash with to half. flow year, and Our than revenue year offsetting revenue flat first for in the the XXXX, decrease the stronger performance been Year-to-date, inventory, increased outlook second for full expected. of the the in has same, our half debt this remains

of unit declined by new revenue U.S., placements team decreased the Canadian America for Revenue Mexican a in the secured our In in our lower increased markets, result year. as Latin mostly market quarter, X.X%. this Geographically, our and total revenue driven volume. second

about uncertainty strong orders long believe, inventory were and customers, stage setting of actions to chain In stronger response categories U.S., retailers, June second year. last in reduced customers high in due and These we our quarter being year largest managed improved unfolded. for demand. inventories by to all created second year's compared across the as were large Latin early disruptions. in a America, created month, continued inventory our too consumer our the last supply levels the inflation the was one situation supply conservatively expected as The quarter to rates retail chain particular, rebalance excess half. many a and In interest and overall issues to last of many

global the this last demand in revenue normalization a commercial which to year's the hospitality In market, quarter, compared industries. of experienced We strong second attribute demand and as post-pandemic decreased. foodservice to

net capital in very We progress continue working reducing to make debt. improving good and

rightsizing made the efforts, Regarding in of we meaningful progress our fourth quarter inventory XXXX.

quarter. The second of first at our $XXX last than year's and we end $XXX anticipated. million with levels ended further compared to quarter second million rate the XXXX, slightly at inventory inventory a the We second better reduced of quarters at

as significantly well. down came debt Our

We for excited year. this prospects are second our about of half the

coffee, new demand steamers stronger the many These garment introducing to categories. serve include new categories due of our wide This others. year, like initiatives. with variety Our expectations in slow second for grills, blenders, cookers, single than personal and we products half placements progress of ovens, more innovative strategic XX products and a platforms high are are across product

will that the new promotions and us gained outstanding for Our a team market benefit range customers has placements job half. year we share securing our of across broad also in an and channels. products second done expect We've this

and held We For one the brand categories. based units. the three XX in in top number gained on remained Hamilton Beach a U.S. categories share the ended months XX share June XX XX, in

Our new commercial product by and launches grow new XXXX, distribution. is business expected in driven to

positions and our blending and including to leverage leadership continued areas, heritage solutions. mixing in expand categories, We back-of-the-house the into while new we

our increase generate strong invest initiatives, revenue, which in We time. margin continued and operating to designed are expand over strategic cash to flow

As we systems. licensed water electric including countertop number purifiers now products, products, brands CHI Wolf for a premium result, growing and Gourmet have Brita a appliances, air care garment countertop of Clorox filtration

exclusive appliances These year distribute several milks. market that these appliances that also plant-based injection which we new We agreements for develop, investments. us. Bartesian and launch for are machines, medical to plan new system the cocktail we to believe care are well-positioned and next early benefit and the HealthBeacon include under have Numilk markets we the from multi-year home to management We

focus two like some potential on partnership and our and the on for Today, I our the background see of provide Numilk in we initiatives strategic to would home market. and medical opportunity

partnership. Numilk our First,

for this fresh making announced we with on of provides March which In Numilk, company milks year, plant-based an known agreement a system demand. a as

this both excited and very see retail partnership are continue plant-based potential and use about to great the as applications grow. commercial in milks We of

partner. progress combines high Numilk in pouches in with provides delighted to a sales, sourcing, ingredients has as ingredients Numilk market. in strengths the were and marketing water and appliance in scale raw to quality in fresh plant-based selected milks. developing will partnership Numilk's business. an are desired taste. appliance known milk We and help exciting engineering, next-generation leverage produce blender that made opportunity partner excellent to distribution. their a This plant-based product be Numilk a our design, for Their type their process excellent

Household and approximately are billion. U.S., the The in We milk the year plant-based penetration billion. Last sales $XX XX%. retail plant-based market believe for market penetration nearly was household $X the were opportunity market fast-growing. Globally, estimated at significant. the is was milk

are in plant-based weekly trying one that indicates people Research it. three drink milk and more adults

We expect category annually. approximately of sales milk plant-based U.S. grow XX% to the

and same fresher commercial product establishments. free in Many than interested buying and is at produces preservatives. This shops prepackaged making that The these people approach are milks coffee rather for home other of products. a goes

appreciate carbon the a of reduced decreasing to energy saving environmental and also and benefits shipping footprint from landfills. packaging sent People

machines. and designs commercial We both are completing the product retail for

products to in Our early is new launch plan XXXX. the

Next, I expand to participation market to our and home this market. wellness initiative and health in We in address XXXX. increase initiative fast-growing will in began large our the the

have $X with are made, new in products which progress the pleased have U.S. the purification annually categories, We of we introducing each of in filtration the water estimated air revenues and billion

Clorox HEPA that brand air and are consumers. new Our purifiers premium been well selling have by the received under True licensed retailers we

impact due is also by Our of and pet particulates. devastating driving the air used allergies pollen, presence and other of many wildfires households demand. purifiers help are quality air The with to indoor to dander

in in at are when to be products new difficult a a provide Our level solution glad most. consumers We're the premium situation. a to market time need the able

to new we under brand the Clorox sanitizer plan launch Additionally, a products humidifier. countertop name, including other a and steam

countertop with launch than sold Brita. contaminants. new of tap year great plus water much XX from create filtration system electric water pleased our product the are this under The standard tasting licensed pitchers brand to reduce to faster best filter the our ever Brita's clean, earlier also We system The electric processes uses water.

reception been Additional favorable. has

star the XX, ratings scored X.X Hub, air new June X.X average of Brita and stars. possible X.X an As a channel purifiers, of in the the eCommerce Clorox

consumer excited about We of the are level very response.

we in I market I more is is strategy growth participating wanted years. less in market. discuss the to the the expected so opportunity discuss nascent our potential. Next, the well-understood, a and be to are trends see to will for medical converging This significant what perhaps coming growth home Several create

solutions Many looking seniors their increasing aging significantly. younger in population is conditions. ways our The enable rising is health to The chronic the at managing are is personalized lockstep. well. to country new healthcare in home. patients need demographics the for as for increasingly in industry First, and with manage health living healthcare exists Demand

for Additionally, solutions expected shortage primary other care medical there to drive is health. clinicians. patients' is that growing a further demand physicians, and improve nurses will of at-home This

Technology help services medical the connected many devices delivered. and can accelerate are way

support medical New patients many needs manage enable systems to with digital machines at-home. can combined

hardware technologies distribution sourcing help to companies market. specialize in development, is strategy American core and breakthrough sales our with Our in need with North partner that branding, that

called managing excited smart are of a home. developer very with HealthBeacon forces HealthBeacon We for at have a company medications Limited. leading to injectable tools is joined

product Hamilton Health Beach powered distribution. HealthBeacon. Smart initial the year, the from is Last up set Sharps selling called began initial we Bin by Our and infrastructure

management. direct-to-consumer and with and with distinct They distribution. from patient and collaboration medications continue of have for handling, focus will on pharmacies sales, improve care outcomes clinical and chronic our aspects HealthBeacon, our They which disease in rare storage pharmacies deliver with complex conditions. requirements for efficiently orphan We coordinate Specialty many patients increased traditional to work with are specialty special pharmacies.

will pharmacies specialty of agreements to this secured that has drive begin expect year. sales we HealthBeacon

new announce other and HealthBeacon coming We with collaborate the in opportunities to opportunities medical to partners additional exciting home hope market. exploring months. are We prospective in the some

And Sally. now our I will to over turn discussion

Good start you, compared Greg. Great. morning, I'll results second quarter to second of quarter Thank XXXX. the XXXX with everyone. our

of for volumes quarter the markets, unit to demand Net our the overall in from the mentioned sales XXXX by previously million consumer The year. and retailer of were soft primarily decrease was compared prior rebalancing. $XXX.X $XXX.X second for which lower million driven most resulted

coverage of was lower unfavorable in the $XX.X non-cash a and mix, year. or of on prior million of lease customer million of charge contraction to $XX fixed product profit in consolidation to and volume was lower a warehouses. to margin, compared $XXX,XXX cost XX.X% Gross due XX% the or the impact revenue Margin impairment total resulting related average

expenses general expense. compared was quarter year, service gross of related to employee $X.X last the million $XX.X million lower compared administrative reflecting were expenses contraction. profit XXXX. in second the of profit Higher by the offset Selling, quarter to outside and $XXX,XXX Operating flat was

decrease rates. Net and of of year, XXXX XX, higher flat currency a expense in XXXX, average less was reflecting current $XXX,XXX compared year. compared Other significant than the offset last to June by interest interest to $XXX,XXX debt includes $XXX,XXX net expense was in gains

per benefit The in tax diluted the a due of benefit not net million income prior second benefits and year for on XX.X% the this income Net reversal income of a effective to per income effective year or tax. year rate was expense this compared higher $X.X $X.XX year. recur on year a compared that did of prior the from share diluted tax to last X.X% $X.XX year. the state discrete penalties in and was in share was the or quarter to The discrete $XXX,XXX current interest for rate tax unrecognized

and provided working $XX.X year used cash compared on our last primarily to of to was Now sheet due cash balance in of activities net provided our focus flows. operating million capital by $XX.X improvement. Net cash cash a working this million cash of turning capital use million Net million $XX.X year, to operating compared XXXX. activities $XX to for of

compared to collection initiatives improvements. million sales million $XX.X Trade outstanding receivables of $XX.X due provided to days net cash that led to

continue cash to inventory significant in in actions used payable million million $XX.X payable. compared provided Net accounts $XX.X was million XXXX. $XX.X accounts cash provided to We by $XX.X XXXX. million take by Net was reduce to and compared manage used to inventory

increase significantly new be to to million years. our The million. system software investments ERP are U.S. internal able and our behind to XXXX costs, to $X distribution $X.X expected year. recent compared capital expenditures been to compared our infrastructure annual including related Capital last investments center, have were primarily for in we million expenditures $X new to major Capital $XXX,XXX with use us, development decrease

use $XX.X delivered million significantly at of same during As before the period year. $XX.X progress compared result of we flow last working improving capital, a strong our a financing and to cash million

flow We $XXX.X $XX.X repurchases. well was On June to million quarterly as strong allocated XXXX. to our primarily net reduce XX, to value million and dividend to as XXXX, debt cash through on XX, June return share compared debt our shareholders

cash repurchased $XXX,XXX. second price market quarter, During the purchase regular shares in $X.X dividends at prices an million for we XX,XXX around aggregate paid prevailing and of

XXXX, XX, had borrowing credit we available June million $XX.X capacity facility. of under of As our

Now, turning to XXXX. our year full outlook the for

to profit expect million expected total in the we As full recovery XXXX, to be $XX increase to Greg reported, revenue compared XXXX. year continue is Operating insurance excluding to XXXX. flat with

increase to capital. a expected our net compared Cash working result XXXX flow as improvements in before is to significantly financing of

if change could outlook orders are demand or currently expected. Our softer retailer replenishment customer than

That our prepared remarks. concludes

We will for the now line to Q&A. turn back the operator

I time. Greg this the at over call for remarks. closing to questions audio no turn are now will Trepp There

we about year. I are the second you. of recap the reasons want this closing, In Thank half excited to

of stable our flagship Beach by strong brands, a Proctor have anchored Hamilton We brands and owned Silex.

of as partnership suite the to of We a also us share strong allowed have market, that segment the in enter categories. have premium as brands new gain well

and Our Numilk Bartesian both markets. benefit our and partnerships consumer commercial

a and broad omnichannel channels. of promotions categories wide placements customers been North of incremental and eCommerce brick-and-mortar, retail group across in awarded range We have a and only American

global also commercial customer base our our within businesses. have grown We

We and positive small on fourth the industry, demand. history from kitchen strong, our of wins benefit quarters. impact expect has in appliance to results the long We a leadership durable a these in have our third which

That Thank you for concludes our the report for again today. joining call.

This participation. concludes your you Thank for conference call. today's

may disconnect. You now