Hamilton Beach Brands Holding (HBB) 31 Oct 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Beach Brands Holding Company Q3 2024 Earnings Conference Call. [Operator Instructions] I will now hand things over to Lou Anne Nabhan, Head of Investor Relations. Lou Anne, you may begin your conference.

Ian. you, Thank and Conference everyone, Holding the Quarter Third Good and welcome Webcast Earnings Call Brands for XXXX morning, to Hamilton Company. Beach the for the we issued XX, our after market XXXX SEC we with our earnings quarter release. Yesterday, XXXX, and Form quarter the stock XX-Q third ending September filed closed, on available are documents corporate website. Both our

and and Vice President, Senior speakers are today Cunningham, Scott Our Financial Tidey, Treasurer. Officer Sally President and CEO; Chief

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

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

will And over the to turn Scott. call now I

and Lou morning, you, Good us. you everyone, Anne. joining for Thank thank

our with We are forward I and discussing look quarter pleased third our results, to performance. strong

get to to address our would we that, Before like I recent leadership changes.

role smooth and Greg year-end. the today, continue rest his on us XX, Board with stepped support and Last which is former call deeply month, I'm an To plan. the to here appointed with time of and was down a is President as thoughtful first This of ensure his our to leadership CEO announced October who excited advisory long-term company. company, Board CEO my in result X. change Trepp, honored role I retirement us Greg to the September and for for of will our member as effective by transition, our a be succession of a CEO, Directors,

the my thank his he Greg for thinking cultivated champions outstanding his is CEO. past leadership years years global a built to Under and leadership, It team pleasure as recognize especially which and culture, XX XX good our innovation. over company, fantastic our with his

notable positioned health home with solutions for Beach global we're future, sales growth our and have and and strong partnerships in and the for his care Proctor advances a grateful leverage successes, Hamilton incredibly commercial a in creation has strategy contributions. including the important presence us premium market share e-commerce, business acquisitions. Greg's to strongly achieved of Silex, and we Together, markets, advances the and leadership for in

I'd like now to a And say to words. ask few Greg

well-planned Scott. was a a the spend CEO you, role It's succession. truly of career company, This most with in transition the February CEO. October. took appointed of is in a to part role privilege in President of Thank remarkable and President been my Scott and especially leadership on

closely Over ensure the we seamless transition. few months, past a worked to

confidence of together. in what with global and brings forward to our him upon the we've His senior full I our successor. values and mission years focus knowledge ideal make business, Scott, build and team expertise of deep and people Scott accomplished XX strategic have our our our management company. carry

culture our qualities make come our company's These very team satisfaction. commitment innovation from committed and focus about to thinking strengths Beach's want our future. Hamilton on customer our I -- suppliers good became its to and since trust institutional me with of engage team, customers, our the also company public with we their It's our partners thank and been in Directors, shareholders for support. Board a and XXXX. business rewarding optimistic

congratulate building of the that I Lou Sally his earnings closing, those and has know many well-deserved in success. participated will everyone we and continued have I quarterly calls continue Anne wish Scott, Scott Over the promotion on past several conferences Scott and relationships. attended. investor In years, our

to you, back Scott. Now

for kind We you wonderful and wish all retirement. Greg, a your unwavering you, support. your words Thank

details to for Sally turn open our the and I'll it we a operating financial Now before questions. and high-level performance. I'll up cover will provide overview,

we with pleased delivered this are the have We financial year. results

revenue For compared period the first to X months, grew same year. our last X.X% the

XX.X%. XX.X% gross Our XXX doubled, basis points by net expanded margin profit year. income to almost and Operating to XX.X% last compared profit increased

Let to compared this last me now year discuss the year. same third period quarter the of

post-pandemic conditions me that trends. remind in you and we normalization context, year's a let business quarter, last third For saw of

turnaround, through extraordinary disruptions then and a operating chain surge that demand, included cost. team quarters. spiking container across environment challenges in the spanned our supply product Before an managed historic Pandemic-driven and strong that had several falling

Early were third to of have quarter, we returned however, transit normal By that normal working other times last returned the the normalized. lead had suppliers remnants times, environment. still parts have most shipping year, of to business through our and

comparisons. previously, As said cycling we've challenging half this compared year, first now to more of we are the

growth same we to last X%, and gross revenue time, by compared period the expanded points the of margin basis third quarter, same XXX in delivered At profit year. the our

margin our Both are income favorable operating impacted for by X were onetime X and the term. consecutive year-over-year items: noncash profit price the stock items long appreciation; and for pension expense In termination has incentive to gross net fact, profit In due higher quarters. expanded charge. quarter, compensation current

quarter. increased while Our stock and for price in resulting SG&A this equity XX% comp incentive shareholders, increased

The quarter our of our free increase pleased surplus cash these will income, events. Overall, overfunded of also plan $XX that realized in despite resulted historical it reclassification flow pension while are a XXXX XXXX. losses termination third results our very assets million with net of U.S. and into we in

XXXX. into our outlook and we head the the for full We we and momentum, we year have year XXXX, are as finished reaffirming good

our in revenue the and products initiatives. that our of of improve command margins. success growth innovative, reflects the premium We're Our and sales quarter can third expanding strategic year-to-date focused on our high-value prices

we new products we work that we've address consumer product our numerous entirely grills, mixers, new slow more. ovens, aims variety Innovation spanning research wide new introduced unique our than core offering kettles, coffee, of by consumers. existing is of garment maximize platforms as XX and delight refreshes many at consumer the With needs blending, solutions launching are industry-leading our This care across to Each year, from and cookers, products product benefits. to of to more success. categories a innovation development, high-demand

innovation pipeline we the Our which is and supports markets all in robust participate.

has range Our overall. team and This to across products securing across us an job market share new customers enabled channels. a North placements has for and done of America outstanding success promotions gain our broad

now how initiatives growth. are provide insights strategic driving and our markets key I'll our some brief into

in Beach focus Silex and driving our on North First, America. brands, our core Hamilton Proctor

by well-known In third quarter, brands. we with is these that portfolio strong placements products customers. the numerous introduced Our key innovative anchored won

Maker the traditional like Hamilton launched for X-in-X in processor personal espresso In Electronic to new the industry's the does appliances: FlexBrew demand of kitchen Kitchen a Beach X-in-X X blender. blending, new the blender, the we and experiences category, a Coffee makers, catering food System work versatile smoothie offered at that models home. high-quality largest coffee, a we In separate

perfection. that released also safely We meat frozen the Go life it Cooker & cooking Defrost and defrosting Programmable to makes Hamilton for easier Beach Slow

slow the but For rice cook Hamilton consumers X in like food a sear, and don't are want X and or offer cook to appliance. by who a we use These prepare new cooking combines countertop, ways can which well multiple grains. Slow options brown, versatile cooker Beach It Cooker, both slow want to X-in-X consumers. Searing sauté, whole cookers roast, steam, rice keep warm, retailers received cluttered

Fryer The Air versatile Toaster Oven Countertop fast-growing to ovens Hamilton Beach designed a with Digital for segment. air frying new continue be powerful to cooking. be is faster

functions: bake, cooking and toast, choose convection. You boil, fry, dehydrate X can from air

well, Our consumers. new favorable we products and are and received responses retailers selling from

in like will gain market. growing I total represents participation of this we're faster industry and and share. and initiative brands expanding the its market. Beach with Next, market, which is XX% the premium about new in discuss our licensed into premium gaining multiyear key than overall Through agreements Weston share brands, owned categories increasing to Hamilton the is

growth. continue sales care Our CHI enjoy garment to strong premium products and

introduced the And designed steamer, travel. New products powerful with capabilities, garment heats on for and it quickly wrinkle-free and lightweight the in wrinkles or In which removes home easy include compact category, at companion clothes the is garment This up irons Vibes is seconds. just CHI maintaining steam we the steamers. fast-growing perfect steamer for have garment steamer and go. XX

Clorox treat ultraviolet light. air and We HEPA filtration our purifiers introduced for partnerships we spaces True features Purifier, new countertop electric which and water are systems. Clorox Ultra a pleased an very large with Brita This year, Air can

countertop We steam have Clorox introduced a Clorox sanitizer humidifier. a also and

brand Numilk. Our premium newest is

market aligns positions healthier, meet consumers makers new variety Our enable sustainable to significantly create current potential This brand on through market to Numilk well premium the and product milks share demand in our presence with of we to in demand. and our the market. revenue growing in expanding our fresh plant-based offerings, and positioned high us this are By product trends towards category. consumer increase this partnerships innovative a grow options milk

to Next, where substantial our area commercial strategic our especially multibillion-dollar a we commercial The upside, market. represents is with significant global This internationally. expand growth the potential. in as opportunity market lead global a key initiative footprint market we see

service aligns hotel amenities. equipment. demand products strong durable, higher-margin profit high-performance markets designed with commercial in Commercial and increasing our use investing as are the and operations We initiative as food for potential, in for well offer for beverage

new third, expand of driving with we fourth, our and ship product First, and leveraging commercial with are our accommodate innovation the Our to customers; to market. second, adding the menu are commercial partnering growth their medium increasing we current like in strategy needs our new and Bartesian companies that includes ones, operators; meet world with hospitality sales and in offerings; restaurant with and partnerships products components: and customers several reach by Numilk unique we are customized are the influence including develop existing our chains space across key global large and that the cruise we

such is company blenders mixers. and in as categories heritage drink strong particularly Our

categories. in We these are investing technologies in advanced

batch Summit Hamilton our large Our Beach solutions. performance, blending blenders blender while shaver offer offers Edge best-in-class

to food new the prep prep time immersion processes, minimize into back categories house expanding like reduce the the preparation waste. are food of equipment We and BigRig our with for blenders streamline

we significant Asia, see opportunities. growth Internationally, presenting India Europe, as and Africa

are and focusing We markets. share diverse dynamic in on our market and geographic our these footprint expanding increasing

years. potential about growth our commercial the expansion provide market in margin optimistic for future global for significant opportunities revenue to and are We

Hamilton aimed initiative, have created about in Beach newest management, of care years brand which market Health commitment lives. to at Hamilton X of connected began to we More this accelerate and ago to explore devices and growth home become improving our a the is provider Health. reflecting is our and Beach our XXXX. Next recently, innovation health We software

ages. aging Technology market chronic therapeutic an in services management in health opportunity as need home well tools, medical making particular, systems. is population remote all increased possible is of people home conditions for The including care by at-home being health demographics, it of driven develop to as monitoring

is safe February, HealthBeacon, medication the to adherence increase we and bringing disposals. acquired In sharp Bin, us designed Sharps which regimens to support Smart

revenue is Our offering model income here reoccurring at higher subscription-based, margins.

investments increasing quarterly, making is profit HealthBeacon start-up in phase. The and are XXXX. to to we part going is We in contribute of operating integration Revenue HealthBeacon as well. their expect

include conditions number of new plans treated patients with Growth specialty system. and the customers, specialty existing attracting pharmacy the using adding that pharmacies are new increasing

We are discussions care expand also we solutions. Hamilton specialty focus to management is home providing promising collaborations others. X, with are pharmacy on new adding further and exploring health Beach a additional on in our Health January several

rewarding positioned a are forward. well holiday planned believe incremental share our year accomplishments new we're market the solid momentum placements, to X and this holiday see, for In months for -- over closing, increased products, We to this well our season. us promotions, first carry position of

the we to challenges the consumer in to a with points, broad products anticipate value While solid for offer price the line we restrained and spending sales economy, of remains due holiday. luxury

year to XXXX. performance a deliver good expect very the for We

over And to Sally. discussion now I will turn our

of Great. Scott. quarter our everyone. start will morning, Thank I to Good XXXX the you, third results compared third XXXX. with quarter

that third you've we even to revenue are quarter started the third comparisons in as quarter more over XXXX. expansion and starting As heard, are growth we gross experienced the profit our cycle pleased results. We with of difficult

that and expenses, noncash from equity faced from income. was stock headwinds expense reclassified due onetime comprehensive operating However, appreciation increased and expense income other incentive to net profit accumulated termination the pension including plan

partially placements increase Most discussed. a Starting was decreases. as new year's over primarily Scott driven third revenue. expected quarter revenue $XXX.X average of volume, U.S. growth mix was offset the last favorable million, and product as The which a that the quarter. by X% market, Total with the benefited increase by well higher the from in was third incremental consumer in price

consumer Mexican consumer Canadian Latin our while Revenue decreased and also increased market, in American revenue in our markets.

revenue China. markets, market was quarter soft to included in international global our million revenue $X.X the HealthBeacon especially experienced new Our third from Also of acquisition. in commercial decrease due a

small has While in to it the this this is expected point, is quarter at contribution to and total revenue grown XXXX. year grow every

Gross compared our to quarter XX.X% and to million. quarter. compared profit In XX% prior favorable in to profit historical quarter current range. product have we year, points year's margin totaled was this $XX.X $XX.X costs. third to mix above The profit XXX quarter expanded million every due basis lower the year in Gross above and margin expansion in product last delivered gross

marketplace. has team effective job an in our gross while competitive done profit keeping strong remaining the Our margin

significant employee-related by million increased equity the Selling, to third general and XXXX. quarter including our absence recovery in in $X.X $X.X administrative higher HealthBeacon's of SG&A million stock the expenses driven price million increase to prior in incentive of XXXX, compared third $XX.X the the of of insurance a compensation of $XXX,XXX noncash The due and increased the the to primarily expenses, addition year. of million appreciation nonrecurring was quarter of $XX.X

has are our that expenses within team done managing good the Our job a control.

our in operating $XX.X is Operating is I mode it reflected decrease year in progressing by to compared we that The million ago. HealthBeacon expansion million still expect Scott's to the as higher reiterate partially and contribute expenses, margin. $XX.X profit comments and integration was profit SG&A the want of planned, to start-up XXXX. profit to gross a offset

due to from $X.X to was accumulated was comprehensive to of reclassification of XXXX termination noncash debt lower a interest ago Net compared in a other charge $XXX,XXX losses and related expense. year Pension levels both $XX,XXX interest lower -- expense expense onetime historical other income. the unrecognized million

employee This resulting over benefit this the XXXX. expect finalized a Our retirement increasing approved termination we Board used to plan next other assets will And million cash we in we as few win will the to planned thereby years overfunded $X.X of in that U.S. use use have The estimated expected, flow existing otherwise third termination the deployed at surplus of pension big our is for free the fund defined quarter. in would XXXX. expect been as this benefits. us purpose, for XXXX assets cash -- surplus free as and be

pension to the million $X.X compared per million. per to compared $X.XX a diluted $X.XX or diluted or termination million share ago impact million The inclusive the of the expense $X.XX $X.X tax million $X.X plan termination period to income, plan ago. a net plan income of $XXX,XXX was year was benefit expense the year current $X.X due Net termination expense tax $XX.X share Income pension or share. impact, of was per pension of the diluted to of

balance our sheet cash Now flows. turning to and

period the post-pandemic-driven benefit normalized year, was last ended reduction million months For to a post-pandemic of which normal the X the by $XX.X operating net working cash of higher same than $XX.X to significant This inventory. XX, due for reflective compared is in excess was amount September XXXX, activities provided capital. million, which

were noncash the capital termination adjustments net by the in million Net cash focus change our current current million. million net $X.X working the Capital to prior net compared in sales on to The which to periods. reflects expenses. led income in and working capital benefited The provided $XX.X both payable management, XXXX stock activities operating partially $XX.X by provided pension capital and for from improvements and working changes, period offset days year continued outstanding days the in compensation outstanding. period expenditures

prices. to through dividends paid and acquisition months we million fund quarterly repurchased During cash and to dividend Year-to-date, repurchases. totaling at the X return million in XXXX, we for of million shareholders share to HealthBeacon market XX, $X.X the $X.X value $X.X allocated have ending the September flow shares and prevailing

On of September at $XX.X total debt the $XX.X highly equivalents minus cash liquid investments cash end year million XX, XXXX, short-term debt to net period. was prior and and compared million the or

June credit Our XXXX. revolving XX, expires on facility

have yet We sheet. the of completed as our all liabilities the And balance accordingly, current have on not been amounts facility. refinancing classified outstanding

history maturity. of meet funds refinanced our liquidity will the We probable operating and flows cash from available the to status the we and the believe refinancing is successfully will operating on facility provide hand, believe facility on our refinancing Based that be it our commitments. its of debt, needs and cash sufficient before

Now let we me turn said, are to our outlook, which, as reaffirming. Scott

XXXX. significantly We increase continue to to profit to increase year full and the as operating full year expect to XXXX revenue modestly compared

I'd more like little our to color a outlook. to add

expansion quarter margin and normalized the As continued focus Scott and the strategic revenue price impact cost gross of of of costs demand, our our reported discussed, on with growth we favorable starting have XXXX in initiatives. because profit and progress as each quarter and third and have since, management

growth third As normalized XXXX, are our the cycling back we quarter into began of XXXX. that results half the move the comparisons in of

the year full be modestly expected is below small XXXX, to kitchen the marketplace For appliances XXXX. retail for

strategic expect result We continued industry of progress our with the initiatives. our as a outpace to

As achieved last stronger we half our revenue expected revenue growth first discussed of comparisons. in growth was we half the to our year-over-year year due than the the the call, the in for second

increase gross to we higher year be on expanding in operating expect to continue significantly in than in to over Growth Moving first the have In again, second the cycle was full to growth impact, expect profit half, this we of that compared based expanded operating year XXXX estimated this operating by SG&A. margin. as profit. quarter, the XXXX of to we will XXXX. stronger profit the for Despite growth continue half impacted third fourth the profit that the quarter we the started

of comparable gross the expect to XXXX. that will half second of second be profit the We margin half XXXX in

on I'll flow. cash comment also

operating an reduction which was year inventory. activities impact cash ended provided net used $XX.X improvement, our less capital investing of December for For outsized significant on by cash the XX, working pandemic-driven included the excess the activities of XXXX, particularly million, focus

from cash Our is in the activities $XX to million less investing range. operating normalized activities $XX cash million used for

range. We end expect of in that upper end the XXXX to

That concludes our prepared remarks.

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

[Operator Instructions] from [ (sic) the AJB first Our Adam AGB Capital question with Bradley of ]. comes line Capital

been great years for with for expansion, Scott, just about have congrats been pleased really and another a the profitability recently. I've and quarter. several -- especially on Sally shareholder

I So ask... wanted to

Adam. you, Thank

Scott, welcome. job, Yes. And I guys. Yes. mean, good

Yes. Thank you.

as a looking leadership to I'm your forward shareholder.

So I If expanded as and about at and I gross forward-looking. well. as expansion, that has the has great. to few last the highlight, the been have like level, start significant detailed the been some P&L understand inform help questions margin you there has quarters, The line, SG&A especially all

$X.X good That your seeing it. amount identified a HealthBeacon. If in here about of million quarter, example, equity we're that I You year-over-year growth. XX% explains the remarks out, still for SG&A take in this like compensation of

also to And margins back what I'm to really SG&A if normalize SG&A your would would question. question gross between levels, trying gross that to very how portions get profit relationship of as rate, my a begin to Because So is, the low -- your if a is come to SG&A. high though but SG&A specifically, to rather rate is expanding My down? are to of -- is gross line. and costs mid-single-digit that sales Trying the at growing not is SG&A we're gross at understand to change margin expense profit were sales? historic correlated than is

I certainly, controllable rightsize see course, inherently take the margin, you and look our a as as started So well. expand SG&A, mean, profit investments, I those you think of a as would, within then right? gross at constriction question. ability we good have and constrict, in think to our we expenses if right, to make that's needed I

things are do now, SG&A with of beyond price I seeing that you're our in a right our control the stock think couple appreciation.

drain little known knew profit, business. year to seeing of we're first of increase to making, the I a bit think the SG&A some investments you're operating be permanent nature particularly on this right? that's kind but because buying of another Like we was in that a going HealthBeacon, that

be I you're in what business strategic business seeing continued that think pursue profit we the to will operating of and we're investments grow And just then feel continue like to rest in initiatives. to contributing the trying is our there But from XXXX. as

Okay. Great. Yes.

that stock the continues... let's On price, hope

a thing, It's bad thing. good Yes.

your question. number the issue. I think can compensation, Well, answers in But ultimately that my do that think Yes. I of you control shares that you

So it new we're of profitability into that of the as some of SG&A to I ask can have question. I or the can as a -- -- in some summarize, well it now expansion seeing Great. result some is back the I expanded get in investment okay. second and queue. areas

No, ahead go go ahead. Yes, ask it. and

Yes.

great price X higher margin investor see last what to expansion has gross X coming on from to you're X for my is -- has reasons actually for quarters. see this better great been result been face, the two that volumes, over doing. been quarters, been it's One actually the unit actually Two, of has really So just perspective. its profitability from your down unit or and per price it's

than what little volume every margins? it's So profit to higher existing mix while basis. been previous you one one, sustainable -- months highlight Like Can XX is the all now, over I are -- XX quarter a rolling and more a number for you're how gross it's gross question, now you is hitting mean, price. contributing that on

sustainable? investment product much Just help it driving give you and of lines understand it is of Is a areas, is versus more older can new it. or product little sustainability in color a its driving what more lines? new So little what's on it extensions -- how And really us specifically?

so I your key to to profitability, think think I we know. it's need

is Okay, Adam. I mean, this Scott.

gotten have period. more gross had as also that because mix we've decreases the time cost normalized our into So profits been from is It brought a of back just a reasons and of couple I you improving. think why up we've

profits. of But a we've couple at strategic as about, higher we got initiatives that talked gross are favored

to you're profits small in are amount, we that margins our Hamilton on And premium in Beach we're business, will going we commercial indicated, improved working also to still the Health very the it's we really space, as you our hard healthy for the that than space. share while find higher markets. to We've going a I in be the In on bring those -- market as us. market. gross margins mass bring improve find As think

we'll look work on markets. mix continue our So want as how certain at we to growing in to we overall, be do share

And just so generally goods partners gross our and offering higher-priced more one to drivers segment, in market between that that's premium of overall the retail more our profit. share getting that's been driving

And this the sustainability of level gross of margin...

think focused. I Adam, we're very Yes,

If the to we're to at products pushing out, profits. continue up goal new our bringing look you our XX-plus is that keep gross

consumer And here to drive are so more there, developing designing and I solutions, continue share. thing of continue market teams profits. grow do. though, and that that those need that's and there's mean that we We to a to to feel have like at higher a we products gross we like ability lot we're our but feel meet -- space

new has All job. great been right. looked of the is hitting stable of good and the at profitability. history a Anyone that now always Well, it's Great and level job. company,

questions. Thank you, Adam. Appreciate your

are back some for closing over There like to I further at things hand questions time. Scott to Tidey would remarks. no this

you. Thank

avenues strong grow As and heard margins we multiple revenue, continue flow. cash today, to pursuing you've deliver are expand to

increasing to shareholder committed is company Our value. long-term

a expansion. position. we to We finishing look increase revenue forward in this significant For profit the year operating margin growth year deliver profit, in gross strong XXXX, to a expect and reflecting

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