HAMILTON BEACH BRANDS HOLDING COMPANY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS
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Insights
Hamilton Beach Brands Holding Company's recent financial results indicate a positive trajectory in terms of revenue growth and operational efficiency. The reported 5.3% increase in Q4 revenue and the significant expansion in gross profit margin by 290 basis points for the full year are key indicators of the company's ability to manage costs effectively and optimize its product mix. Moreover, the substantial improvement in cash flow from operating activities, turning from a negative cash flow to $88.6 million, reflects a strong focus on net working capital management.
However, the full-year revenue decrease of 2.4% suggests that the company may be facing challenges with its pricing strategy or market demand fluctuations. The reduction in total debt from $110.9 million to $50.0 million demonstrates a strategic approach to deleveraging, which is likely to be viewed positively by investors concerned with financial stability. The company's proactive measures in stock repurchase and dividend payments also signal confidence in its financial health and commitment to shareholder returns.
The outlook for 2024, with expected modest revenue growth and moderate increase in operating profit, suggests a cautiously optimistic view. The emphasis on strategic initiatives, particularly in the North American market and the expansion into the health sector with the acquisition of HealthBeacon, indicate potential new revenue streams and diversification of the company's portfolio. However, the expected operating loss from Hamilton Beach Health in 2024 should be monitored as it may impact short-term profitability.
The small kitchen appliance industry is highly competitive and Hamilton Beach's performance must be contextualized within this framework. The company's market share growth in the U.S. and its focus on premium and innovative products are strategic moves to differentiate itself in a saturated market. The shift towards higher-margin products could potentially offer a buffer against the price sensitivity that often characterizes this sector.
Hamilton Beach's strategic initiatives, such as expanding its digital footprint and leveraging partnerships, are aligned with broader retail trends, where ecommerce and digital transformation are critical for capturing market share. The increase in ecommerce sales to 39% of total revenue is a testament to successful adaptation to consumer purchasing behaviors. This digital focus is essential for maintaining relevance and driving growth in an increasingly online retail landscape.
On the international front, the decrease in global commercial market sales reflects the volatility that can arise from geopolitical unrest and market saturation. This underscores the importance of a diversified and adaptable global strategy that can withstand such external pressures.
The acquisition of HealthBeacon and the creation of Hamilton Beach Health represent a strategic entry into the home healthcare market, which is experiencing growth due to increasing health awareness and technological advancements. Hamilton Beach's approach to leverage its brand in developing digitally connected health tools aligns with the trend towards remote patient monitoring and personalized healthcare.
HealthBeacon's subscription-based revenue model and focus on chronic disease treatments could offer a recurring revenue stream, diversifying Hamilton Beach's income sources. However, the initial operating loss expected in 2024 for Hamilton Beach Health indicates the challenges inherent in scaling new ventures, particularly in the healthcare sector where regulatory compliance and market penetration are significant hurdles.
Investors should consider the long-term potential of this venture against the backdrop of an aging population and a shift towards in-home care. The success of this initiative will hinge on the company's ability to integrate HealthBeacon's technology with its existing product development capabilities and effectively market these new health management tools.
GLEN ALLEN, Va., March 6, 2024 /PRNewswire/ -- Hamilton Beach Brands Holding Company (NYSE: HBB) (The Company) today announced results for the fourth quarter and full year 2023.
Highlights of 2023 Periods Compared to 2022 Periods
THREE MONTHS | TWELVE MONTHS | |||
2023 | 2022 | 2023 | 2022 | |
(In millions) | ||||
Revenue | $ 206.7 | $ 196.2 | $ 625.6 | $ 640.9 |
Gross profit | $ 55.3 | $ 34.1 | $ 143.7 | $ 129.1 |
% of revenue | 26.8 % | 17.4 % | 23.0 % | 20.1 % |
Operating profit | $ 25.0 | $ 11.3 | $ 35.1 | $ 38.8 |
% of revenue | 12.1 % | 5.7 % | 5.6 % | 6.1 % |
Cash flow from operating activities | $ 88.6 | $ (3.4) | ||
Total debt | $ 50.0 | $ 110.9 | ||
Net debt | $ 34.6 | $ 110.0 | ||
- Revenue in Q4 2023 grew
5.3% compared to Q4 2022, reflecting increased sales in the Company's consumer markets overall partially offset by decreased sales in the Company's global commercial market - For the full year 2023, gross profit margin expanded by 290 basis points to
23.0% , reflecting lower product costs and favorable product mix - Operating profit in Q4 2023 was
$25.0 million $11.3 million - Cash flow from operating activities for the full year 2023 was
$88.6 million $3.4 million - For the full year 2024, the Company expects total revenue to increase modestly and operating profit to increase moderately
Results of the Fourth Quarter 2023 Compared to the Fourth Quarter 2022
Total revenue grew
In the Global Commercial market, revenue decreased compared to the fourth quarter of 2022, when revenue grew
Gross profit was
Selling, general and administrative expenses increased to
Operating profit was
Interest expense, net decreased to
Net income was
Results of the Full Year 2023 Compared to the Full Year 2022
Total revenue of
Gross profit was
Selling, general and administrative expenses were
Operating profit was
Interest expense, net decreased by
The effective tax rate on income was
Net income was
Cash Flow and Debt
For the year ended December 31, 2023, net cash provided by operating activities was
The Company allocated its strong cash flow primarily to reduce debt and return value to shareholders through the quarterly dividend and repurchase of stock. On December 31, 2023, total debt was
For the full year 2023, the Company paid
Outlook
In 2024, the retail marketplace for small kitchen appliances is expected to be modestly below 2023. The Company expects that continued progress with its strategic initiatives will enable it to deliver above market revenue performance. For the full year 2024, the Company expects total revenue to increase modestly compared to full year 2023. Revenue in both the first half and second half of 2024 is expected to increase modestly with the first half expected to be somewhat stronger than the second half mostly due to comparisons to the prior year. Operating profit for the full year 2024 is expected to increase moderately compared to 2023 based on an expansion of gross profit margin.
Continued progress with the Company's six strategic initiatives is expected to drive revenue growth, expand margins, and generate strong cash flow over time. The initiatives are focused on increasing sales of innovative, higher priced, higher margin products in the Company's core North American market. The following is a summary of each initiative.
Drive Core Growth: This initiative is focused on driving the growth of the Company's flagship brands Hamilton Beach® and Proctor Silex® in its core North American market. Both brands have a long history of consumer trust, based on quality, durability and innovation. The Company has a long track record of developing innovative new products that improve everyday living in the small appliance category. Teams study consumer pain points and develop new product solutions that have enabled the Company to generate significant revenue over time. New products are supported by digital marketing, social media advertising and influencer marketing. Hamilton Beach® continues to be the #1 small kitchen appliance brand in the
Gain Share in the Premium Market: The Company continues to develop, license and acquire brands to increase its participation in the premium market. New products and digital marketing support underpin the strategy to grow this business. Premium products include the Company's owned brands Hamilton Beach Professional® and Weston®, and the licensed brands Wolf Gourmet® countertop appliances, CHI® premium garment care products, CloroxTM True HEPA air purifiers, and Brita HubTM countertop electric water filtration appliances. The Company has an exclusive multiyear agreement to design, sell, market, and distribute Bartesian® premium cocktail delivery machines. In March 2023, the Company announced an agreement to provide the next generation of specialty appliances for use with Numilk® raw ingredients to create a variety of fresh non-dairy milk products on demand in homes and commercial establishments. Initial rollout for the new Numilk appliances began in early 2024.
Accelerate Growth of Hamilton Beach Health: Drawing on decades of experience as a trusted resource in the home, in 2021 the Company created the Hamilton Beach Health® brand. The Hamilton Beach Health business empowers people to take control of their health with digitally connected tools using in-home solutions. In February 2024, Hamilton Beach Health acquired HealthBeacon PLC, a medical technology firm and strategic partner of the Company since 2021. HealthBeacon develops connected devices that enable patients with chronic conditions to manage their injectable medication regimens at home and provides other health services. The Company believes HealthBeacon is an attractive investment with the potential to increase shareholder value over time as the business is scaled and expanded. Growth opportunities are expected to be driven by the development of in-home healthcare management tools, including Remote Therapeutic Monitoring systems. Sales are principally through the specialty pharmacy channel in the
Lead in the Global Commercial Market: This initiative is focused on securing new business and increasing sales with existing customers that operate in the food service and hospitality industries throughout the world. The Hamilton Beach® brand, with its reputation for performance, reliability and differentiated products, is driving growth of commercial products. Continuing to develop products that create a competitive advantage in the Company's core blending and mixing categories, as well as expanding into new categories organically, is the cornerstone of the strategy. Commercial customers include restaurants, fast food chains, bars and hotels. The Company's products are sold through distributors and increasingly through internal sales capabilities. The Company's commercial products are sold in more than 100 countries and more than
Accelerate Digital Transformation: The Company has a well-developed ecommerce capability and continues its investments to gain share in ecommerce markets for consumer and commercial products. The Company collaborates closely with omnichannel and online-only retail customers to leverage the fast-paced changes in the ecommerce channel and increase awareness and sell-through of its products. The Company focuses on robust digital marketing that includes online product content, search optimization and advertising, attracting favorable reviews and strong star ratings, and social media strategies. The Company's
Leverage Partnerships and Acquisitions: This initiative is focused on identifying and securing businesses with a strategic fit to the Company's portfolio. The Company is actively engaged in the pursuit of additional trademark licensing agreements, strategic alliances, and acquisitions to drive growth in all its markets, including accelerating the growth of Hamilton Beach Health in the home health market.
Conference Call
The Company will conduct an earnings conference call and webcast on Thursday, March 7, 2024, at 9:30 a.m. Eastern time. The call may be accessed by dialing 888-350-3452 (toll free), International 647-362-9199. Conference ID: 1809480. The conference call will also be webcast live on the Company's Investor Relations website at www.hamiltonbeachbrands.com. An archive of the webcast will be available on the website.
About Hamilton Beach Brands Holding Company
Hamilton Beach Brands Holding Company operates through its wholly owned subsidiary Hamilton Beach Brands, Inc., a leading designer, marketer, and distributor of a wide range of branded small electric household and specialty housewares appliances, as well as commercial products for restaurants, fast food chains, bars, and hotels. The Company's owned consumer brands include Hamilton Beach®, Proctor Silex®, Hamilton Beach Professional®, Weston®, and TrueAir®. The Company's owned commercial brands include Hamilton Beach Commercial® and Proctor Silex Commercial®. The Company licenses the brands for Wolf Gourmet® countertop appliances, CHI® premium garment care products, CloroxTM True HEPA air purifiers, and Brita HubTM countertop electric water filtration appliances. The Company has exclusive multiyear agreements to design, sell, market, and distribute Bartesian® premium cocktail delivery machines, and specialty appliances to create Numilk® non-dairy fresh milk on demand. The Company's Hamilton Beach Health subsidiary is focused on expanding the Company's participation in the home health market. In February 2024, Hamilton Beach Health acquired HealthBeacon, a medical technology firm and strategic partner of the Company. HealthBeacon develops connected devices that enable patients with chronic conditions to manage their injectable medication regimens at home and provides other health services. For more information about Hamilton Beach Brands Holding Company, visit hamiltonbeachbrands.com.
Forward-Looking Statements
The statements contained in this news release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Such risks and uncertainties include, without limitation: (1) uncertain or unfavorable global economic conditions and impacts from global military conflicts; (2) the Company's ability to source and ship products to meet anticipated demand; (3) the Company's ability to successfully manage constraints throughout the global transportation supply chain; (4) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialty housewares appliances; (5) changes in consumer retail and credit markets, including the increasing volume of transactions made through third-party internet sellers; (6) bankruptcy of or loss of major retail customers or suppliers; (7) changes in costs, including transportation costs, of sourced products; (8) delays in delivery of sourced products; (9) changes in or unavailability of quality or cost effective suppliers; (10) exchange rate fluctuations, changes in the import tariffs and monetary policies and other changes in the regulatory climate in the countries in which the Company operates or buys and/or sells products; (11) the impact of tariffs on customer purchasing patterns; (12) product liability, regulatory actions or other litigation, warranty claims or returns of products; (13) customer acceptance of, changes in costs of or delays in the development of new products; (14) increased competition, including consolidation within the industry; (15) changes in customers' inventory management strategies; (16) shifts in consumer shopping patterns, gasoline prices, weather conditions, the level of consumer confidence and disposable income as a result of economic conditions, unemployment rates or other events or conditions that may adversely affect the level of customer purchases of the Company's products; (17) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation; (18) the Company's ability to identify, acquire or develop, and successfully integrate, new businesses or new product lines; and (19) other risk factors, including those described in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2023. Furthermore, the future impact of unfavorable economic conditions, including inflation, changing interest rates, availability of capital markets and consumer spending rates remains uncertain. In uncertain economic environments, we cannot predict whether or when such circumstances may improve or worsen, or what impact, if any, such circumstances could have on our business, results of operations, cash flows and financial position.
HAMILTON BEACH BRANDS HOLDING COMPANY | |||||||
THREE MONTHS ENDED | YEAR ENDED | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(In thousands, except per | (In thousands, except per | ||||||
Revenue | $ 206,650 | $ 196,248 | $ 625,625 | $ 640,949 | |||
Cost of sales | 151,366 | 162,186 | 481,949 | 511,835 | |||
Gross profit | 55,284 | 34,062 | 143,676 | 129,114 | |||
Selling, general and administrative expenses | 30,245 | 22,759 | 108,395 | 90,120 | |||
Amortization of intangible assets | 50 | 50 | 200 | 200 | |||
Operating profit (loss) | 24,989 | 11,253 | 35,081 | 38,794 | |||
Interest expense, net | 366 | 1,700 | 3,000 | 4,589 | |||
Other expense (income), net | (5) | 130 | 385 | 1,776 | |||
Income (loss) before income taxes | 24,628 | 9,423 | 31,696 | 32,429 | |||
Income tax expense (benefit) | 5,059 | 2,325 | 6,454 | 7,162 | |||
Net income (loss) | $ 19,569 | $ 7,098 | $ 25,242 | $ 25,267 | |||
Basic earnings (loss) per share: | |||||||
Basic earnings (loss) per share | $ 1.40 | $ 0.51 | $ 1.80 | $ 1.81 | |||
Diluted earnings (loss) per share: | |||||||
Diluted earnings (loss) per share | $ 1.40 | $ 0.51 | $ 1.80 | $ 1.81 | |||
Basic weighted average shares outstanding | 13,966 | 13,882 | 14,036 | 13,970 | |||
Diluted weighted average shares outstanding | 13,985 | 13,904 | 14,060 | 13,996 | |||
HAMILTON BEACH BRANDS HOLDING COMPANY | |||
DECEMBER 31 | DECEMBER 31 | ||
(In thousands) | |||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 15,370 | $ 928 | |
Trade receivables, net | 135,434 | 115,135 | |
Inventory | 126,554 | 156,038 | |
Prepaid expenses and other current assets | 9,457 | 12,643 | |
Total current assets | 286,815 | 284,744 | |
Property, plant and equipment, net | 27,401 | 27,830 | |
Right-of-use lease assets | 39,423 | 44,000 | |
Goodwill | 6,253 | 6,253 | |
Other intangible assets, net | 1,292 | 1,492 | |
Deferred tax assets | 2,581 | 3,117 | |
Deferred costs | 14,613 | 14,348 | |
Other non-current assets | 6,324 | 7,166 | |
Total assets | $ 384,702 | $ 388,950 | |
Liabilities and stockholders' equity | |||
Current liabilities | |||
Accounts payable | $ 99,704 | $ 61,759 | |
Accrued compensation | 14,948 | 11,310 | |
Accrued product returns | 6,232 | 6,474 | |
Lease liabilities | 6,155 | 5,875 | |
Other current liabilities | 12,549 | 16,150 | |
Total current liabilities | 139,588 | 101,568 | |
Revolving credit agreements | 50,000 | 110,895 | |
Lease liabilities, non-current | 41,937 | 46,801 | |
Other long-term liabilities | 5,910 | 5,152 | |
Total liabilities | 237,435 | 264,416 | |
Stockholders' equity | |||
Preferred stock, par value | — | — | |
Class A Common stock, par value | 112 | 107 | |
Class B Common stock, par value | 36 | 38 | |
Capital in excess of par value | 70,401 | 65,008 | |
Treasury stock | (12,013) | (8,939) | |
Retained earnings | 99,398 | 80,238 | |
Accumulated other comprehensive loss | (10,667) | (11,918) | |
Total stockholders' equity | 147,267 | 124,534 | |
Total liabilities and stockholders' equity | $ 384,702 | $ 388,950 | |
HAMILTON BEACH BRANDS HOLDING COMPANY | |||||
YEAR ENDED DECEMBER 31 | |||||
2023 | 2022 | 2021 | |||
(In thousands) | |||||
Operating activities | |||||
Net income (loss) | $ 25,242 | $ 25,267 | $ 21,306 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating | |||||
Depreciation and amortization | 4,362 | 4,883 | 4,913 | ||
Deferred income taxes | (906) | 372 | 2,110 | ||
Stock compensation expense | 5,394 | 3,424 | 3,237 | ||
— | 2,085 | — | |||
Other | (358) | (129) | 1,025 | ||
Net changes in operating assets and liabilities: | |||||
Affiliate payable | — | — | (505) | ||
Trade receivables | (18,768) | 4,532 | 27,631 | ||
Inventory | 30,761 | 26,399 | (9,077) | ||
Other assets | 10,856 | 6,274 | (4,729) | ||
Accounts payable | 37,493 | (69,911) | (20,037) | ||
Other liabilities | (5,440) | (6,614) | (8,017) | ||
Net cash provided by (used for) operating activities | 88,636 | (3,418) | 17,857 | ||
Investing activities | |||||
Expenditures for property, plant and equipment | (3,419) | (2,279) | (11,844) | ||
Issuance of secured loan | (1,605) | — | — | ||
Other | (150) | — | — | ||
Net cash provided by (used for) investing activities | (5,174) | (2,279) | (11,844) | ||
Financing activities | |||||
Net additions (reductions) to revolving credit agreements | (60,916) | 14,383 | (1,550) | ||
Purchase of treasury stock | (3,074) | (2,979) | — | ||
Cash dividends paid | (6,082) | (5,782) | (5,468) | ||
Financing fees paid | — | (47) | (114) | ||
Other financing | — | — | (134) | ||
Net cash provided by (used for) financing activities | (70,072) | 5,575 | (7,266) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,084 | (123) | (33) | ||
Cash, cash equivalents and restricted cash | |||||
Increase (decrease) for the year | 14,474 | (245) | (1,286) | ||
Balance at the beginning of the year | 1,905 | 2,150 | 3,436 | ||
Balance at the end of the year | $ 16,379 | $ 1,905 | $ 2,150 | ||
Reconciliation of cash, cash equivalents and restricted cash | |||||
Continuing operations: | |||||
Cash and cash equivalents | $ 15,370 | $ 928 | $ 1,125 | ||
Restricted cash included in prepaid expenses and other current assets | 72 | 62 | 48 | ||
Restricted cash included in other non-current assets | 937 | 915 | 977 | ||
Total cash, cash equivalents and restricted cash | $ 16,379 | $ 1,905 | $ 2,150 | ||
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SOURCE Hamilton Beach Brands Holding Company
FAQ
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