Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, ERP

HAMILTON BEACH BRANDS HOLDING COMPANY ANNOUNCES SECOND QUARTER 2022 RESULTS


GLEN ALLEN, Va., Aug. 3, 2022 /PRNewswire/ -- Hamilton Beach Brands Holding Company (NYSE: HBB), which operates through its wholly owned subsidiary Hamilton Beach Brands, Inc., today announced results for the second quarter of 2022.

Highlights

Second Quarter 2022 Compared to Second Quarter 2021
Total revenue decreased $7.1 million, or 4.6%, to $147.5 million compared to a record $154.7 million. Sales declined in most of the Company's consumer markets compared to the prior year, which included the favorable impact of U.S. government stimulus checks on consumer spending. Partially offsetting the decline was a revenue increase of $4.1 million, or 37.3%, in the Company's global commercial market, as the foodservice and hospitality industries continued to rebound strongly from pandemic-driven demand softness.

Revenue decreases in the Company's U.S., Latin American and Mexican consumer markets were partially offset by increased revenue in the Canadian consumer market. Also contributing to the decrease in total revenue compared to the prior year was a transition from a company-managed model to a licensing model for the Company's consumer business in Brazil and China, which was completed at the end of 2021.

Ecommerce sales increased 8.3% and accounted for 37.3% of total revenue compared to 32% in the second quarter of 2021.

Gross profit was $32.0 million compared to $28.4 million. Gross profit margin was 21.7% compared to 18.4%, primarily due to the impact of a full quarter of price increases that offset higher product and transportation costs. Additionally, there was a reduction in carrier storage charges compared to the second quarter of 2021.

Selling, general and administrative expenses decreased to $26.5 million compared to $27.4 million, primarily due to incremental expenses incurred during the relocation to the Company's new distribution center in the second quarter of 2021 that did not recur. Additionally, expenses decreased for outside services. Overall employee-related costs decreased due to lower accruals for incentive compensation as a result of a decline in the Company's stock price.

Operating profit was $5.4 million compared to $0.9 million.

The effective tax rate on income was (5.8)% compared to 79.1%. The current year amount reflected the favorable impact of reversing interest and penalties on unrecognized tax benefits that were included in the prior year. The reversal was due to a change in the Company's position on an unresolved tax matter related to the Company's Mexican subsidiaries.

Net income was $5.1 million, or $0.36 per diluted share, compared to net income of $0.1 million, or $0.01 per diluted share.

On February 22, 2022, the Company's Board of Directors approved a stock repurchase program for up to $25 million of the Company's Class A Common outstanding through December 31, 2023. During the three months ended June 30, 2022, the Company repurchased 151,221 shares at prevailing market prices for an aggregate purchase price of $1.6 million.

Cash Flow and Debt   
For the six months ended June 30, 2022, net cash used for operating activities was $25.5 million compared to cash provided by operating activities of $8.4 million in the prior year, primarily due to net working capital, which was a use of cash of $36.1 million in 2022 compared to providing cash of $14.6 million in 2021. In 2022, trade receivables provided net cash of $19.8 million compared to $45.2 million in the prior year due to the timing of collections and decreased sales in 2022 compared to 2021. Net cash used for inventory and accounts payable combined was $55.9 million in 2022 compared to $30.6 million in 2021. 

Capital expenditures through the second quarter of 2022 decreased to $0.7 million compared to $7.6 million through the second quarter of 2021, primarily due to capital spending for the Company's new distribution center in the prior year that did not recur.

At June 30, 2022, net debt, or debt minus cash and cash equivalents, was $126.3 million compared to $98.1 million at June 30, 2021, and $95.7 million at December 31, 2021, due to higher net working capital.

Outlook
Industry-wide demand for small kitchen appliances in the U.S. has slowed somewhat compared to the Company's previously stated outlook, however, it remains significantly higher than pre-pandemic levels and only slightly softer than 2021. Consumers continue to prepare a significant number of meals and beverages at home as a result of new habits formed during the pandemic, continued remote or hybrid work-from-home practices, a heightened interest in healthy eating, and as a means to control expenses during inflationary times. The global commercial market is expected to continue to rebound strongly from pandemic-driven demand softness.

The Company continues to experience significantly higher transportation and product costs due to inflation and ongoing supply chain constraints. To mitigate rising costs, the Company has implemented additional pricing initiatives that are becoming effective in the third quarter of 2022 and expects to continue to adjust prices as necessary while also remaining competitive with customers and consumers. The Company may not be able to cover all future cost increases with additional pricing initiatives.

Inventory at the end of the second quarter of 2022 is primarily due to supply chain constraints that delayed delivery of some 2021 orders from China and to recently announced retailer inventory rebalancing programs. While the Company's products are not in an overstocked position, overstock levels in other categories are having a near-term impact on retailer reorders overall. The Company's inventory is of good quality. The Company expects to significantly reduce current levels by the end of the year through ongoing placements and purchase order management.

The Company's core business is solid, and it expects each of its strategic initiatives to provide growth in 2022 as it focuses on increasing sales in the premium, home health and wellness, and global commercial markets. Compared to the Company's previous outlook, sales expectations for the second half of 2022 have been adjusted slightly to reflect a somewhat more conservative outlook for consumer demand, while sales expectations for the Company's commercial products assume a continued strong rebound from pandemic-driven softness. The Company continues to expect that revenue for the second half of 2022 will increase modestly compared to the second half of 2021. For the full year 2022, Hamilton Beach Brands continues to expect modest revenue growth compared to record revenue in 2021. Full-year operating profit is expected to increase significantly compared to 2021, which includes a $10 million insurance recovery in the first quarter of 2022.

The Company's current outlook could change depending on how a number of factors in the macro environment ultimately unfold, including retailer inventory rebalancing programs, retailer acceptance of any needed price increases to offset rising product and transportation costs, inflationary pressures, rising interest rates, consumer sentiment, any worsening of supply chain constraints, Covid protocols in China, and the direct or indirect impact of the conflict in Ukraine.  

The Company's six strategic initiatives are focused on long-term growth and value creation. Following is a brief summary of each one.

Expand in Home Health and Wellness: This initiative was added in 2021. During the past year, the Company took many steps to introduce new products in the air purification, water filtration and home medical categories. New products in these categories are expected to generate revenue as they are launched throughout 2022 and into 2023 and gain momentum. To date, the Company has:

Gain Share in the Premium Market: New products and digital marketing are expected to drive growth of the Company's premium brand products. In 2022, the Company plans to launch Generation 2 of the Bartesian® premium cocktail machine, which will provide enhanced functionality, as well as introduce the Bartesian Duet, a smaller 2-bottle model, and a commercial model. The CHI® garment care brand continues to grow as consumers return to offices and engage in more evening and weekend activities following the pandemic receding.

Lead in the Global Commercial Market: The Company expects to generate additional growth in the global commercial market through product development, digital marketing and increasing customer relationships with regional and global chains.

Drive Core Growth: The Company plans to drive growth of its flagship Hamilton Beach® and Proctor Silex® brands through innovative new product development, including an emphasis on higher priced products,  and digital marketing.

Accelerate Digital Transformation: The Company plans to continue to invest in robust digital marketing for all of its brands and markets.

Leverage Partnerships and Acquisitions: The Company is actively engaged in the pursuit of additional trademark licensing agreements, strategic alliances and acquisitions that would drive growth in all of its markets.

Hamilton Beach Brands expects to benefit from a number of strengths and competitive advantages, even during periods of economic downturn. These include:

Conference Call
The Company will conduct an earnings conference call and webcast on Thursday, August 4, 2022, at 11:00 a.m. Eastern time.The call may be accessed by dialing 844-200-6205 (US) or 929-526-1599 (all other locations), Access Code: 733621.  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®, TrueAir®, Brightline® and Hamilton Beach Health®. The Company's owned commercial brands include Hamilton Beach Commercial® and Proctor Silex Commercial®. Hamilton Beach Brands licenses the brands for Wolf Gourmet® countertop appliances, CHI® premium garment care products, Clorox® air purifiers, and Brita® countertop water appliances. Hamilton Beach Brands markets and distributes the Bartesian® premium cocktail delivery system through an exclusive multiyear agreement. Hamilton Beach Brands has entered the home medical market through a multiyear agreement with HealthBeacon plc and is the exclusive marketer and distributor of a smart Injection Care Management System in the U.S. and Canada under the new brand name Hamilton Beach Health®. 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 Securities Exchange Act of 1934.  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) the Company's ability to source and ship products to meet anticipated demand, (2) the Company's ability to successfully manage ongoing constraints throughout the global transportation supply chain, (3) the unpredictable nature of the COVID-19 pandemic and its potential impact on the Company's business; (4) the direct and indirect impacts of the increasingly volatile global economic conditions as a result of the conflict in Ukraine; (5) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialty housewares appliances, (6) changes in consumer retail and credit markets, including the increasing volume of transactions made through third-party internet sellers, (7) bankruptcy of or loss of major retail customers or suppliers, (8) changes in costs, including transportation costs, of sourced products, (9) delays in delivery of sourced products, (10) changes in or unavailability of quality or cost effective suppliers, (11) 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, (12) the impact of tariffs on customer purchasing patterns, (13) product liability, regulatory actions or other litigation, warranty claims or returns of products, (14) customer acceptance of, changes in costs of, or delays in the development of new products, (15) increased competition, including consolidation within the industry, (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 HBB products, (17) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation, and (18) 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, 2021.  Furthermore, the situation surrounding COVID-19, including the mutation of variants, continues to remain fluid globally and the Company continues to manage ongoing challenges associated with the pandemic as they relate to demand, supply and operations. The potential for a material impact on the Company's results of operations, financial condition, liquidity, and stock price remains a risk. The Company cannot reasonably estimate with any degree of certainty any future impact of COVID-19.  The extent of any impact will depend on the scope of any new virus mutations and outbreaks, the nature of government public health guidelines and the public's adherence to those guidelines, the success of business and economic recovery as the pandemic recedes, the easing of pandemic-driven supply chain disruptions, unemployment levels, and the extent to which new lockdowns may be needed or are required in particular countries including China.

 

 

 

HAMILTON BEACH BRANDS HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



THREE MONTHS ENDED

JUNE 30


SIX MONTHS ENDED

JUNE 30


2022


2021


2022


2021


(In thousands, except per
share data)


(In thousands, except per
share data)

Revenue

$     147,527


$     154,655


$     293,878


$      303,904

Cost of sales

115,549


126,272


233,670


243,828

Gross profit

31,978


28,383


60,208


60,076

Selling, general and administrative expenses

26,503


27,447


41,936


53,826

Amortization of intangible assets

50


50


100


100

Operating profit (loss)

5,425


886


18,172


6,150

Interest expense, net

867


698


1,600


1,418

Other expense (income), net

(252)


(224)


1,214


(53)

Income (loss) before income taxes

4,810


412


15,358


4,785

Income tax expense (benefit)

(279)


326


3,096


1,823

Net income (loss)

$         5,089


$             86


$       12,262


$          2,962









Basic and diluted earnings (loss) per share

$           0.36


$          0.01


$           0.87


$           0.21









Basic weighted average shares outstanding

14,068


13,875


14,065


13,865

Diluted weighted average shares outstanding

14,095


13,887


14,093


13,881

 

 

 

HAMILTON BEACH BRANDS HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)



JUNE 30
2022


DECEMBER 31
2021


JUNE 30
2021


(In thousands)

Assets






Current assets






Cash and cash equivalents

$                     701


$                1,125


$                 1,108

Trade receivables, net

99,723


119,580


102,898

Inventory

228,353


183,382


151,728

Prepaid expenses and other current assets

13,105


14,273


18,220

Total current assets

341,882


318,360


273,954

Property, plant and equipment, net

28,680


30,485


30,319

Goodwill

6,253


6,253


6,253

Other intangible assets, net

1,592


1,692


1,792

Deferred income taxes

1,364


4,006


3,425

Deferred costs

19,411


18,703


14,192

Other non-current assets

5,509


3,005


3,070

Total assets

$               404,691


$            382,504


$              333,005

Liabilities and stockholders' equity






Current liabilities






Accounts payable

$               121,552


$            131,912


$                99,387

Accrued compensation

7,376


11,719


7,666

Accrued product returns

5,286


6,429


6,276

Other current liabilities

12,939


14,116


17,957

Total current liabilities

147,153


164,176


131,286

Revolving credit agreements

127,003


96,837


99,170

Other long-term liabilities

13,733


19,212


19,461

Total liabilities

287,889


280,225


249,917

Stockholders' equity






Class A Common stock

106


103


102

Class B Common stock

39


40


41

Capital in excess of par value

63,390


61,586


60,881

Treasury stock

(7,600)


(5,960)


(5,960)

Retained earnings

70,145


60,753


45,188

Accumulated other comprehensive loss

(9,278)


(14,243)


(17,164)

Total stockholders' equity

116,802


102,279


83,088

Total liabilities and stockholders' equity

$               404,691


$            382,504


$              333,005

 

 

 

HAMILTON BEACH BRANDS HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



SIX MONTHS ENDED

JUNE 30


2022


2021


(In thousands)

Operating activities




Net income (loss)

$                        12,262


$                         2,962

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating
activities:




Depreciation and amortization

2,465


1,847

Deferred income taxes

1,533


3,925

Stock compensation expense

1,806


2,532

Brazil foreign currency loss

2,085


?

Other

223


(55)

Net changes in operating assets and liabilities:




Affiliate payable

?


(471)

Trade receivables

19,846


45,150

Inventory

(45,714)


23,159

Other assets

1,019


(6,824)

Accounts payable

(10,275)


(53,674)

Other liabilities

(10,706)


(10,126)

Net cash provided by (used for) operating activities

(25,456)


8,425

Investing activities




Expenditures for property, plant and equipment

(661)


(7,616)

Net cash provided by (used for) investing activities

(661)


(7,616)

Financing activities




Net additions (reductions) to revolving credit agreements

30,237


686

Purchase of treasury stock

(1,640)


?

Cash dividends paid

(2,870)


(2,689)

Other financing

?


(163)

Net cash provided by (used for) financing activities

25,727


(2,166)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(36)


78

Cash, cash equivalents and restricted cash




Increase (decrease) for the period

(426)


(1,279)

Balance at the beginning of the period

2,150


3,436

Balance at the end of the period

$                          1,724


$                         2,157





Reconciliation of cash, cash equivalents and restricted cash




Cash and cash equivalents

$                            701


$                         1,108

Restricted cash included in prepaid expenses and other current assets

62


213

Restricted cash included in other non-current assets

961


836

Total cash, cash equivalents, and restricted cash

$                          1,724


$                         2,157

 

Hamilton Beach Brands Holding Company logo (PRNewsfoto/Hamilton Beach Brands Holding C)

 

SOURCE Hamilton Beach Brands Holding Company


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