Hamilton Beach Brands Q4 2024 Earnings Report

Hamilton Beach Brands EPS Results

• Actual EPS: $1.75
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Hamilton Beach Brands Revenue Results

• Actual Revenue: $213.51 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Hamilton Beach Brands Announcement Details

• Quarter: Q4 2024
• Date: 2/26/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, February 26, 2025
• Conference Call Time: 4:30PM ET

Hamilton Beach Brands (NYSE:HBB) is a designer, marketer and distributor of branded small kitchen and household appliances. The company’s product portfolio spans a range of countertop and electric appliances, including blenders, mixers, toasters, coffeemakers, slow cookers, air fryers, and specialty beverage machines. Through the Hamilton Beach and Proctor-Silex brands, the company serves both everyday consumers and commercial foodservice operators.

Established in 1910, Hamilton Beach has introduced a number of innovations in small-appliance technology, from early electric drink mixers to modern immersion blenders and multi-function cookers. The company develops and sources its products through global manufacturing partnerships, leveraging proprietary motor designs and user-friendly controls to differentiate its offerings in a crowded market. Product distribution channels include mass-merchandise retailers, e-commerce platforms and foodservice equipment suppliers.

Headquartered in Glen Allen, Virginia, Hamilton Beach Brands markets its appliances across North America, with growing presence in international markets through strategic distributors. The company’s management team brings decades of experience in the consumer durable goods sector, focusing on product innovation, supply-chain efficiency and brand development. Hamilton Beach continues to invest in research and design to expand its lineup of user-centric appliances and strengthen its position in the global small-appliance industry.

Hamilton Beach Brands Q4 2024 Earnings Call Transcript

Key Takeaways

• Hamilton Beach delivered a low single-digit revenue gain in Q4 with profitability above expectations and maintained gross margins north of 26% despite a promotion-driven holiday environment.
• For the full year, revenue rose mid single-digits, gross margins expanded by 300 basis points, operating profit grew 23%, and the company generated over $65 million in operating cash flow, ending 2024 in a net cash position while returning more than 65% of net income to shareholders.
• The February acquisition of HealthBeacon kick-started the Hamilton Beach Health segment with 32,000 subscriptions and a planned launch of its SmartSharps system through an Optum Health partnership, targeting over 50% subscriber growth.
• Management expects mid single-digit revenue growth in 2025, operating profit growing faster than sales, gross margins at record levels, a step-up in marketing investment, and $40–50 million in net cash flow after investing activities.
• The company has mitigated 35% of its tariff exposure, aims for another 25–35% reduction in 2025, and plans to offset any remaining tariff impact through selected price increases and supplier concessions.

Presentation

[Operator]

Thank you for standing by. At this time, I would like to welcome everyone to today's Hamilton Beach Brands Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. If you'd like to withdraw your question, simply press star one again. Thank you. Without further ado, I would like to turn the call over to Brendan Frey, partner with ICR. Brendan, you have the floor.

[Brendan Frey, Partner at ICR]

Thank you, Greg. Good afternoon, everyone, and welcome to the Fourth Quarter 2024 Earnings Conference Call and Webcast for Hamilton Beach Brands. Earlier today, after the stock market closed, we issued our Fourth Quarter 2024 earnings release, which is available on our corporate website. Our speakers today are Scott Tidey, President and CEO, and Sally Cunningham, Senior Vice President, Chief Financial Officer, and Treasurer. Our presentation today includes forward-looking statements.

[Brendan Frey, Partner at ICR]

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in either our prepared remarks or during the Q&A. Additional information regarding these risks and uncertainties is available in our 10-Q, our earnings release, and our annual report on Form 10-K for the year ended December 31, 2023, and soon-to-be-filed Form 10-K for the year ended December 31, 2024.

[Brendan Frey, Partner at ICR]

The company disclaims any obligation to update these forward-looking statements, which may not be updated until our quarterly conference call, our next quarterly conference call, if at all. The company will also discuss certain non-GAAP measures. Reconciliation for Regulation G purposes can be found in our earnings release. Now, I'll turn the call over to Scott. Scott.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Thank you, Brendan, and good afternoon, everyone. Thank you for joining us today. We are pleased with our fourth quarter results, which represented a solid finish to a successful year. Our Q4 performance was highlighted by low single-digit growth and profitability that exceeded our expectations. Importantly, we maintained strong gross margins north of 26% despite a promotionally driven market environment during the holidays as consumers remained selective with discretionary spending.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

These achievements reflect our team's focus on operational excellence as we continue to drive top-line expansion while maintaining the incremental leap in gross margin we've taken this year. Looking at our full-year performance, I'm very proud of our team's accomplishments. We delivered strong financial results across our key metrics. Revenue increased mid-single digits, driven by successful new product launches and new points of distribution. We expanded gross margins by 300 basis points and grew operating profit 23%.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Our focus on operational efficiency and working capital management yielded strong cash flow results as well. We generated more than $65 million in operating cash flow, which speaks to the underlying strength of our business model and our team's execution. This robust cash generation, combined with our disciplined approach to capital allocation, allowed us to end 2024 in a net cash position, a significant achievement that was accomplished while continuing to return value to shareholders through both share repurchases and our dividend program. Along with these strong operating results, we took decisive action to add new opportunities to our growth plans, led by further expansion into the healthcare market through our acquisition of HealthBeacon last February. We also took steps to diversify our manufacturing and sourcing to further reduce our exposure to China.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

This work was not only additive to our 2024 performance, but has positioned the company to maintain its top-line momentum and recent gains we've made in our margin profile. As we've discussed previously, we continue to execute against six strategic initiatives, which serve as the blueprint for driving long-term growth and shareholder value for Hamilton Beach Brands.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

These strategies include driving core growth, gaining share in the premium market, leading in the global commercial market, accelerating growth of Hamilton Beach Health, accelerating our digital transformation, and leveraging partnerships and acquisitions. Today, I'd like to review the key drivers of our 2024 success in support of these initiatives, starting with our success introducing innovative new products and platforms to help drive future share gains in our core business. As many of you know, Hamilton Beach Brands has a long track record of bringing innovative new products to market.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Our new product introductions over the past few years have performed very well, helping us to gain share in both the U.S. and in our international markets. In 2024, our U.S. consumer business grew 3.6%, outpacing the overall market percent. We saw even greater growth in our Mexico and Latin America business, led by strong gains in Mexico, where Hamilton Beach moved up several spots to capture the number three small appliance brand in December. A great example of new product innovation driving our recent performance is the FlexBrew coffee maker. The FlexBrew Advanced 5-in-1 Coffee Maker offers consumers unprecedented versatility with five ways to brew, a space-saving design with one footprint, and the ability to wake up to either a fresh brewed single cup or 12 cups.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Additional features include a dual-position 60-ounce water reservoir, fast brewing capabilities that can brew a single cup in less than two minutes, an easy-to-use LED touchscreen, and convenient cleaning features. New products also helped us gain share in categories such as blenders, irons, and slow cookers. Along with these new exciting innovations, we also accelerated our efforts to increase our share of large and under-penetrated categories in 2024.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Starting with our premium brand strategy, Hamilton Beach Brands operates a powerful portfolio of premium-owned and licensed small appliance brands, including Brita, CHI, and Clorox, which accounted for a mid-teens percent of our overall revenue in 2024. Looking ahead, this represents both an attractive growth and margin expansion opportunity, as we are still less than 3% penetrated in the $4 billion U.S. premium market. Consumers reacted positively to several of our premium product introductions in 2024.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Our Numilk plant-based milk maker, which offers consumers the ability to create a variety of fresh milk on demand, continues to gain traction. This product perfectly aligns with the current consumer trends towards healthier, more sustainable options. We've seen particular interest from health-conscious consumers who appreciate the ability to create fresh, preservative-free plant-based milks at home. Our CHI garment steamer line has been another success story.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

We leverage CHI's strong reputation in the beauty and personal care market to create innovative garment care products. The CHI Vibes Garment Steamer, in particular, has been a hit. It's compact, lightweight, and heats up in just 35 seconds, making it perfect for both home use and travel. We've incorporated CHI's signature lava technology, which provides exceptional heat conductivity, giving consumers professional-grade wrinkle removal in a convenient, portable package. The Clorox Air Purifier line also performed exceptionally well.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

We introduced our largest-ever room air purifier this year, featuring an ultraviolet light that provides an additional layer of air purification. The product has resonated with consumers increasingly concerned about indoor air quality. We've expanded the Clorox line to include a countertop seam sanitizer and a humidifier, providing a comprehensive approach to home air and surface health.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

2024 also saw us work to increase share in our commercial business. While this segment is still relatively a small portion of our overall revenue, it represents another large and under-penetrated opportunity. A highlight for our commercial business in 2024 was the performance of our Summit Edge blender, where sales increased more than 50% as we secured placement in a leading convenience store chain with over 1,000 locations and a global coffee retailer with more than 25,000 stores.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

The Summit Edge high-performance blender delivers speed of service and one-touch convenience, perfect for high-volume commercial environments. Whether blending açaí bowls, green smoothies, protein shakes, or iced coffee drinks, the Summit Edge creates a smooth, creamy profile every time. Key features include power blend technology, ultra-quiet operation with Quiet Blend Technology, one-touch automatic blending, and an intuitive touchpad with optimized programming. Lastly, regarding our newest business segment, Hamilton Beach Health, we are excited about the prospects for expansion and further market penetration of this subscription-based high-margin business.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Since acquiring HealthBeacon in early 2024, we've been developing healthcare management tools, including remote therapeutic monitoring systems. Our first system, the Smart Sharps Bin, is provided primarily through specialty pharmacies. Our growth plans include increasing our current patient subscription base of 32,000 by over 50% through existing or new specialty pharmacy customers and increasing the conditions treated using the system.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

To that end, we signed an agreement with Optum Health in 2024 and look forward to launching this business next quarter. Across each of our businesses, we are focused on growing through our existing distribution and selectively expanding our physical and digital presence. In 2024, we experienced solid growth with many of our major retail partners and commercial customers.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Our small consumer appliance brands sold through well-led by mass market and leading specialty retailers. We also saw solid growth online as we continue to focus on accelerating penetration of this channel. This includes leading pure-play e-commerce retailers, our own brand websites, and the digital sites of our brick-and-mortar partners. With respect to commercial, as I said earlier, we were successfully placing our Summit Edge blender in over 3,500 total doors. We also expanded our business with several large restaurant and hospitality chains in 2024.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

As we look ahead to the new year, we are excited about the opportunities we see across the core, premium, commercial, and health segments of our business. In our core business, we have a robust pipeline of new products that we believe will help us continue to gain market share, particularly in high-growth categories like specialty coffee and air fryers. We look to continue the expansion of our premium product offerings with several new innovative launches planned across our partnerships with CHI, Clorox, and the Bartesian brands.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

We will also accelerate our commercial business expansion, focusing on penetrating new channels and expanding our relationship with large restaurants and hospitality chains. In our Hamilton Beach Health segment, we anticipate seeing the benefit of our Optum Health partnership materialize, and we have plans to expand both our customer base and the conditions treated using our Smart Sharps system.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Additionally, we will continue to explore opportunities to leverage our digital capabilities across all business segments, with a particular focus on enhancing our e-commerce presence and direct-to-consumer channels. To help fuel these initiatives, we expect to meaningfully increase our marketing investment in 2025, which Sally will detail momentarily in her prepared remarks.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

Before I turn it over to Sally, I want to quickly address tariffs, as I know this is top of mind for many investors. In 2023, we took proactive steps with our manufacturing and sourcing to mitigate tariffs. As of year-end, we have mitigated 35% of our business and are on track to mitigate another 25%-35% this year. Additionally, we anticipate being able to offset the impact of higher tariffs through select price increases and supplier concessions being implemented in the first half of 2025.

[Scott Tidey, President and CEO at Hamilton Beach Brands Holding Company]

In closing, I want to thank our global team for their continued dedication and execution excellence throughout 2024. Their commitment to innovation and customer service has been instrumental in delivering these strong results. We enter 2025 with solid momentum across our business and remain focused on executing our strategic initiatives to drive sustainable long-term growth and shareholder value. With that, I'll turn it over to Sally.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Great. Thank you, Scott. Good afternoon, everyone. Starting with our fourth quarter 2024 results compared to the fourth quarter of 2023. As Scott mentioned, we were pleased to deliver a solid finish to an outstanding year. Starting with revenue, total revenue in the fourth quarter was $213.5 million, a 3.3% increase over last year's fourth quarter. The increase was driven primarily by a favorable product mix, as well as higher volume, partially offset by expected average price decreases and foreign currency impacts.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Regionally, our North American consumer markets delivered solid growth, with most strength coming from the U.S. consumer market. These gains were partially offset by revenue declines internationally. Also included in the fourth quarter was $1.7 million of revenue from our HealthBeacon acquisition. Turning to gross profit and margin, gross profit was $55.8 million in the fourth quarter, compared to $55.3 million in the year-ago period.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Gross profit margin was 26.1%, compared to 26.8% of the total revenue in last year's fourth quarter. The contraction in gross profit margin in the current quarter was expected, as we recently reduced prices on certain products after realizing the benefits of lower costs that positively impacted margins starting in the fourth quarter of 2023.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

We have made significant progress expanding gross margins, as evidenced by the step change from our historical range, which was in the low 20% range just a couple of years ago, to consistently in the mid-20% over the past several quarters. Selling, general, and administrative expenses increased $32.1 million, compared to $30.2 million in the fourth quarter of 2023.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

The increase was primarily driven by the addition of $2.1 million of HealthBeacon expenses, partially offset by slightly lower employee-related expenses. Operating profit was $23.6 million, compared to $25 million in the fourth quarter of 2023. Net interest expense in the fourth quarter decreased to $283,000, compared to $366,000 a year ago due to lower debt levels and lower interest rates compared to the year-ago period. Income tax expense was a $1 million benefit in the fourth quarter, compared to an expense of $5.1 million a year ago.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

The $6.1 million change in our tax expense is primarily due to a $4.3 million foreign tax benefit and a change in U.S. tax accounting method, both of which will not recur going forward. Net income in the fourth quarter was $24 million, or $1.75 per diluted share, compared to a net income of $19.6 million, or $1.40 per diluted share a year ago. In terms of the full year, I won't go through the drivers of change in our performance, but want to quickly call out the operating highlights from our income statement.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

For 2024, net revenue increased 4.6% to $654.7 million, compared to $625.6 million. Gross margin increased 300 basis points to 26%, compared to 23%, which I'll note as a record for Hamilton Beach Brands, since it became a standalone public company in 2017. Operating profit increased 23.1% to $43.2 million, compared to $35.1 million.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Our full-year net income increased to $30.8 million, or $2.20 per share, compared to $25.2 million, or $1.80 per share in 2023. 2024 net income includes the aforementioned foreign tax credit and a change in U.S. tax accounting that we benefited from in the fourth quarter, and the $5.7 million negative impact from the pension plan termination that we recorded in the third quarter.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

I'd also like to highlight that we returned more than 65% of our 2024 net income to shareholders through a combination of share repurchases and dividends. Now turning to our balance sheet and cash flows. For the year ended December 31, 2024, net cash provided by operating activities was $65.4 million, compared to $88.6 million for the year ended December 31, 2023, which benefited from post-pandemic working capital improvements. Net working capital for 2024 provided $14.5 million of cash, compared to $49.5 million of cash in 2023.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Cash flow from operations performance in 2024 was enhanced by our ongoing working capital initiatives, as evidenced by favorable trends in both DSO and DPO metrics. The movement in cash flow from operations reflects these working capital dynamics, with partial offset coming from non-cash adjustments related to equity compensation and the pension settlement charges.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

Capital expenditures were $3.2 million in the current year period and $3.4 million in the full year 2023. During the 12 months ended December 31, 2024, we allocated cash flow to fund the acquisition of HealthBeacon for $7.4 million and to return value to shareholders through share repurchases and our quarterly dividend that I mentioned a moment ago. In 2024, we repurchased 668,785 shares, totaling $14.1 million, and paid $6.3 million in dividends. We made significant progress strengthening our balance sheet in 2024.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

On December 31, 2024, our net cash position, or cash and cash equivalents and highly liquid short-term investments, minus our total debt, was $600,000, compared to a net debt position of $34.6 million at the end of 2023. In December of 2024, we entered into a new credit agreement to replace our previous credit facility that was set to expire in June of this year. This new facility extends the terms to December of 2029 and replaces our $150 million facility with a $125 million facility combined with an optional $25 million term loan. As of 12/31, the company carried $50 million in debt with favorable interest rate swaps that generate interest income and a leverage ratio of 1.29 at year-end 2024, compared to a leverage ratio of 1.69 at year-end 2023.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

We believe that funds available from our $50.6 million of cash on hand, the new facility, and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments. Turning now to our outlook for 2025. As Scott mentioned, we expect to build upon our momentum from 2024, driven by several initiatives across our multiple lines of business. The small kitchen appliance retail market is expected to grow in the low single-digit range in 2025. We expect to modestly outperform the industry in 2025, with revenue growth approaching the mid-single-digit range. We expect operating profit to increase at a faster rate than revenue, driven by expense leverage on higher revenue, with gross profit margins in line with the 2024 record level, along with a sharp decrease in HealthBeacon SG&A expenses.

[Sally Cunningham, SVP, CFO, and Treasurer at Hamilton Beach Brands Holding Company]

This will be partially offset by a significant step-up in planned advertising in fiscal 2025 to support our strategic growth initiatives. As Scott said, we have mitigated the impact on approximately 35% of our products, and we are planning to increase this by another 25%-35% in 2025, as we work towards our goal of mitigating potential tariff impacts on 75% of our products. We expect we'll be able to offset any additional impact from tariffs through select price increases and supplier concessions, and therefore don't anticipate the recent change in tariffs to pressure our profitability in 2025. Cash flow from operating activities, less cash flow used for investing activities for 2025, is expected to be in the range of $40 million-$50 million per year. This concludes our prepared remarks. We will now turn the line back to the operator for Q&A.

[Operator]

Thank you so much. At this time, I would like to remind everyone, in order to ask a question, press Star and the number one on your telephone keypad. Once again, Star one. We will pause just a moment. Okay. It appears there are no questions. How about going once and going twice? Okay. Since there are no questions, that will conclude today's call. Thank you all for joining today, and you may now disconnect. Have a great day, everyone.

Participants

Executives

• Scott Tidey, President and CEO
• Sally Cunningham, SVP, CFO, and Treasurer

Analysts

• Brendan Frey, Partner at ICR