GLEN ALLEN, Va., Aug. 5, 2020 /PRNewswire/ --
Highlights from Continuing Operations:
- Q2 2020 total revenue increased 5.5% compared to Q2 2019,
due to strong demand in the US and Canada Consumer markets
- Q2 2020 operating profit increased more than threefold
compared to Q2 2019, on higher revenue, a benefit of $1.6 million for tariff relief and lower SG&A
expenses
- Net debt at June 30, 2020
decreased to $40.2 million from
$80.5 million at June 30, 2019, as a result of improved net
working capital and significantly increased cash flow
- Second half 2020 results are expected to reflect continued
strong demand for small kitchen appliances as consumers continue to
stay close to home during the COVID-19 pandemic, retailers restock
inventories, placements are strong for the holiday selling season,
and cost containment continues
Hamilton Beach Brands Holding Company (NYSE: HBB) today
announced results for the second quarter of 2020.
Second Quarter 2020 Compared to Second Quarter 2019 -
Consolidated Results
Consolidated net income was $7.8
million, or $0.57 per diluted
share, compared to a net loss of $0.6
million, or $0.04 per diluted
share. Net income from continuing operations was $8.1 million, or $0.59 per diluted share, compared to $1.9 million, or $0.14 per diluted share. Net loss from
discontinued operations was $0.3
million, or $0.02 per diluted
share, compared to a net loss of $2.5
million or $0.18 per diluted
share. Kitchen Collection is reported as discontinued operations in
all periods presented.
Second Quarter 2020 Compared to Second Quarter 2019 - Continuing
Operations
Total revenue in the second quarter increased 5.5% to $138.3 million compared to $131.1 million. The US Consumer market continued
to drive the Company's overall results as at-home consumers engaged
in more meal and beverage preparation during the COVID-19 pandemic.
The Canada Consumer market also experienced increased demand.
Revenue in the International Consumer and Global Commercial markets
decreased due to the ongoing adverse impact of the COVID-19
pandemic on emerging markets and on the restaurant and hotel
industries.
In the US Consumer market, demand surged as consumers continued
to stay home and cook more during the pandemic. The industry and
Company experienced robust point-of-sale growth. In the US, for the
three months ended June 30, 2020, the
Hamilton Beach brand remained number one overall based on units
sold. Unit growth of the Hamilton Beach brand outpaced the market
and the Company's Weston and Wolf Gourmet brands significantly
outpaced the market. In Canada,
where the Hamilton Beach brand is number two based on units sold,
growth also outpaced the market. Demand continued to be
particularly strong for the Company's countertop ovens, toasters,
food processors, coffee makers, slow cookers, hand mixers, cocktail
dispensers and breakfast appliances. Demand in the second quarter
led to out-of-stock positions for certain product categories, which
retailers are expected to replenish in the third quarter.
The Company continues to capitalize on its many strengths in the
ecommerce channel, including shipping an increased number of
products through its fast growing direct-to-consumer distribution
operation. Ecommerce sales in the second quarter increased 77% and
accounted for 37% of total revenue.
Operating profit increased more than threefold to $10.9 million compared to $3.2 million, including higher revenue, a benefit
of $1.6 million for tariff relief and
lower SG&A expenses. Gross profit margin increased to 25.5%
compared to 21.8%, including the tariff benefit as well as higher
volume, the sale of higher priced products, and other expense
decreases. Selling, general and administrative expenses decreased
to $24.0 million compared to
$25.0 million due to lower overall
spending partially offset by expenses related to the investigation
of accounting irregularities at the Company's Mexican
subsidiaries.
Net debt at June 30, 2020
decreased to $40.2 million compared
to $80.5 million at June 30, 2019, as a result of improved net
working capital and significantly increased cash flow. Cash flow
before financing activities was $19.7
million for the six months ended June
30, 2020 compared to a use of cash before financing of
$33.6 million at June 30, 2019. There were no share repurchases
during the second quarter.
Second Half 2020 Outlook
Hamilton Beach Brands continues to believe it is well positioned to
effectively navigate the COVID-19 business environment. While the
current robust consumer demand for small kitchen appliances is not
expected to be fully sustained over the long term, the Company
believes it should remain strong for the remainder of 2020. Cost
containment measures implemented following the onset of the
pandemic continue, including curtailing discretionary expenses,
freezing most open positions and focusing capital spending on
critical projects.
For the second half of 2020, the Company expects total revenue
to increase in the mid-to-high single digits compared to the second
half of 2019. The Company has more visibility into the third
quarter and at this time expects a moderate increase
in revenue compared to the third quarter of 2019, driven by
continued strong consumer demand as well as the fulfillment of
significant incremental orders as retailers return to normal
stocking levels following shortages in certain product categories.
For the fourth quarter, the Company expects a modest to moderate
increase in revenue compared to the fourth quarter of 2019, based
on holding and gaining placements and the strength of promotions
planned for the holiday selling season, provided the current robust
demand continues. Based on the current revenue outlook, second half
operating profit is expected to increase 30% or more compared to
the second half of 2019. As the Company meets strong demand for
out-of-stock replenishments and for the holiday selling season, and
executes using its recently implemented enterprise resource
planning system in the US, timing of revenue could shift from the
third quarter to the fourth quarter.
For the full year 2020, Hamilton Beach Brands expects to
significantly exceed its goal of generating cash flow before
financing of $20 million.
Hamilton Beach Brands business is seasonal and a majority of its
revenue and operating profit is earned in the second half of the
year when sales of small kitchen appliances to retailers and
consumers increase significantly to prepare for the fall
holiday-selling season. For the past five years, on average, 60% of
revenue and 85% of operating profit have been earned in the second
half of the year.
Conference Call
The Company will conduct an earnings
conference call and webcast on Thursday,
August 6, 2020 at 9:30 a.m. Eastern
time. To register for this conference call, please use the
following link:
Participant Access:
Online
registration: http://www.directeventreg.com/registration/event/1748687
After registering, a confirmation will be sent via email,
including dial-in details and unique conference call access codes
required for call entry. Registration is open throughout the live
call. To ensure you are connected prior to the beginning of the
call, please register a day in advance or a minimum of 15 minutes
before the start of the call.
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 Company
website.
About Hamilton Beach Brands Holding Company
Hamilton Beach Brands Holding Company is a holding company for
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
consumer brands include Hamilton Beach®, Proctor
Silex®, Hamilton Beach® Professional,
Weston® field-to-table and farm-to-table food
preparation equipment, TrueAir® air purifiers, and
BrightlineTM personal care products. Hamilton Beach
licenses the brands for Wolf Gourmet® countertop
appliances and CHI® premium garment care products.
Hamilton Beach markets the Bartesian® premium cocktail
delivery system through an exclusive multiyear agreement.
Commercial brands include Hamilton Beach Commercial® and
Proctor Silex Commercial®. For more information
about Hamilton Beach Brands Holding Company, visit the Company's
website at www.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 unpredictable nature of the COVID-19 pandemic
and its potential impact on our business; (2) changes in the sales
prices, product mix or levels of consumer purchases of small
electric and specialty housewares appliances, (3) changes in
consumer retail and credit markets, including the increasing volume
of transactions made through third-party internet sellers, (4)
bankruptcy of or loss of major retail customers or suppliers, (5)
changes in costs, including transportation costs, of sourced
products, (6) delays in delivery of sourced products, (7) changes
in or unavailability of quality or cost effective suppliers, (8)
exchange rate fluctuations, changes in the import tariffs and
monetary policies and other changes in the regulatory climate in
the countries in which HBB buys, operates and/or sells products,
(9) the impact of tariffs on customer purchasing patterns, (10)
product liability, regulatory actions or other litigation, warranty
claims or returns of products, (11) customer acceptance of, changes
in costs of, or delays in the development of new products, (12)
increased competition, including consolidation within the industry,
(13) 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, (14) changes mandated by
federal, state and other regulation, including tax, health, safety
or environmental legislation, (15) risks associated with the wind
down of KC including unexpected costs, contingent liabilities and
the potential disruption of our other businesses, (16) the result
of shareholder or governmental actions relating to the restatement
of our financial statements and accounting and legal fees that we
may incur in connection with the restatement, (17) our ability to
successfully remediate the material weaknesses in our internal
control over financial reporting disclosed in Form 10-K/A
within the time periods and in the manner currently anticipated,
additional material weaknesses or other deficiencies that may arise
in the future or our ability to maintain an effective system of
internal controls, (18) difficulties arising as a result of our
implementation of an enterprise resource planning system in the US,
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/A for
the year ended December 31, 2019 and
the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2020. Furthermore, the
situation surrounding COVID-19 remains fluid and the
potential for a material impact on the Company's results of
operations, financial condition, liquidity, and stock price
increases the longer the virus impacts activity levels in
the United States and globally.
For this reason, the Company cannot reasonably estimate with any
degree of certainty the future impact COVID-19 may have on its
results of operations, financial position, liquidity and stock
price. The extent of any impact will depend on the extent of new
outbreaks as communities reopen, the extent to which returns to
lockdown may be needed, the nature of government public health
guidelines and the public's adherence to those guidelines, the
impact of government economic relief on the US economy,
unemployment levels, the success of businesses reopening, the
timing for proven treatments and vaccines for COVID-19, consumer
confidence and demand for our products.
HAMILTON BEACH
BRANDS HOLDING COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
THREE MONTHS
ENDED June 30,
|
|
SIX MONTHS
ENDED June 30,
|
|
|
|
As Restated
and Recast
|
|
|
|
As Restated
and Recast
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(In thousands, except
per
share data)
|
|
(In thousands, except
per
share data)
|
Revenue
|
$
|
138,297
|
|
|
$
|
131,065
|
|
|
$
|
259,143
|
|
|
$
|
257,707
|
|
Cost of
sales
|
103,043
|
|
|
102,558
|
|
|
198,849
|
|
|
202,498
|
|
Gross
profit
|
35,254
|
|
|
28,507
|
|
|
60,294
|
|
|
55,209
|
|
Selling, general and
administrative expenses
|
24,035
|
|
|
24,976
|
|
|
48,248
|
|
|
51,222
|
|
Amortization of
intangible assets
|
324
|
|
|
346
|
|
|
648
|
|
|
691
|
|
Operating
profit
|
10,895
|
|
|
3,185
|
|
|
11,398
|
|
|
3,296
|
|
Interest expense,
net
|
366
|
|
|
789
|
|
|
969
|
|
|
1,452
|
|
Other expense
(income), net
|
(193)
|
|
|
(132)
|
|
|
1,509
|
|
|
(329)
|
|
Income (loss) from
continuing operations before income taxes
|
10,722
|
|
|
2,528
|
|
|
8,920
|
|
|
2,173
|
|
Income tax expense
(benefit)
|
2,657
|
|
|
630
|
|
|
2,209
|
|
|
937
|
|
Net income (loss)
from continuing operations
|
8,065
|
|
|
1,898
|
|
|
6,711
|
|
|
1,236
|
|
Income (loss) from
discontinued operations, net of tax
|
(305)
|
|
|
(2,516)
|
|
|
22,561
|
|
|
(5,239)
|
|
Net income
(loss)
|
$
|
7,760
|
|
|
$
|
(618)
|
|
|
$
|
29,272
|
|
|
$
|
(4,003)
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.59
|
|
|
$
|
0.14
|
|
|
$
|
0.49
|
|
|
$
|
0.09
|
|
Discontinued
operations
|
(0.02)
|
|
|
(0.18)
|
|
|
1.65
|
|
|
(0.38)
|
|
Basic and diluted
earnings (loss) per share
|
$
|
0.57
|
|
|
$
|
(0.04)
|
|
|
$
|
2.14
|
|
|
$
|
(0.29)
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
13,644
|
|
|
13,813
|
|
|
13,635
|
|
|
13,800
|
|
Diluted weighted
average shares outstanding
|
13,670
|
|
|
13,826
|
|
|
13,657
|
|
|
13,813
|
|
HAMILTON BEACH
BRANDS HOLDING COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
As
Restated
|
|
As Restated and
Recast
|
|
JUNE 30 2020
|
|
DECEMBER 31 2019
|
|
JUNE 30 2019
|
|
(In
thousands)
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,616
|
|
|
$
|
2,142
|
|
|
$
|
1,029
|
|
Trade receivables,
net
|
85,209
|
|
|
108,381
|
|
|
86,268
|
|
Inventory
|
90,572
|
|
|
109,806
|
|
|
121,472
|
|
Prepaid expenses and
other current assets
|
13,358
|
|
|
11,345
|
|
|
16,412
|
|
Current assets of
discontinued operations
|
—
|
|
|
5,383
|
|
|
21,255
|
|
Total current
assets
|
190,755
|
|
|
237,057
|
|
|
246,436
|
|
Property, plant and
equipment, net
|
23,064
|
|
|
22,324
|
|
|
21,649
|
|
Goodwill
|
6,253
|
|
|
6,253
|
|
|
6,253
|
|
Other intangible
assets, net
|
2,494
|
|
|
3,141
|
|
|
3,828
|
|
Deferred income
taxes
|
5,830
|
|
|
6,248
|
|
|
3,754
|
|
Deferred
costs
|
11,532
|
|
|
10,941
|
|
|
8,564
|
|
Other non-current
assets
|
2,673
|
|
|
2,085
|
|
|
1,984
|
|
Non-current assets of
discontinued operations
|
—
|
|
|
614
|
|
|
4,420
|
|
Total
assets
|
$
|
242,601
|
|
|
$
|
288,663
|
|
|
$
|
296,888
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
$
|
92,282
|
|
|
$
|
111,348
|
|
|
$
|
86,199
|
|
Accounts payable to
NACCO Industries, Inc.
|
496
|
|
|
496
|
|
|
220
|
|
Revolving credit
agreements
|
41,785
|
|
|
23,497
|
|
|
51,505
|
|
Accrued
compensation
|
11,362
|
|
|
15,027
|
|
|
11,725
|
|
Accrued product
returns
|
7,383
|
|
|
8,697
|
|
|
8,224
|
|
Other current
liabilities
|
15,242
|
|
|
12,534
|
|
|
21,382
|
|
Current liabilities
of discontinued operations
|
—
|
|
|
29,723
|
|
|
20,048
|
|
Total current
liabilities
|
168,550
|
|
|
201,322
|
|
|
199,303
|
|
Revolving credit
agreements
|
—
|
|
|
35,000
|
|
|
30,000
|
|
Other long-term
liabilities
|
12,499
|
|
|
16,075
|
|
|
14,699
|
|
Non-current
liabilities of discontinued operations
|
—
|
|
|
—
|
|
|
3,697
|
|
Total
liabilities
|
181,049
|
|
|
252,397
|
|
|
247,699
|
|
Stockholders'
equity
|
|
|
|
|
|
Class A Common
stock
|
99
|
|
|
98
|
|
|
95
|
|
Class B Common
stock
|
41
|
|
|
41
|
|
|
44
|
|
Capital in excess of
par value
|
56,325
|
|
|
54,509
|
|
|
53,342
|
|
Treasury stock
|
(5,960)
|
|
|
(5,960)
|
|
|
(2,334)
|
|
Retained
earnings
|
30,528
|
|
|
3,710
|
|
|
15,646
|
|
Accumulated other
comprehensive loss
|
(19,481)
|
|
|
(16,132)
|
|
|
(17,604)
|
|
Total
stockholders' equity
|
61,552
|
|
|
36,266
|
|
|
49,189
|
|
Total liabilities
and stockholders' equity
|
$
|
242,601
|
|
|
$
|
288,663
|
|
|
$
|
296,888
|
|
HAMILTON BEACH
BRANDS HOLDING COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
SIX MONTHS
ENDED June 30,
|
|
|
|
As Restated and
Recast
|
|
2020
|
|
2019
|
|
(In
thousands)
|
Operating
activities
|
|
|
|
Net income (loss)
from continuing operations
|
$
|
6,711
|
|
|
$
|
1,236
|
|
Adjustments to
reconcile net income (loss) from continuing operations to net cash
used for operating activities:
|
|
|
|
Depreciation and
amortization
|
1,486
|
|
|
1,841
|
|
Deferred income
taxes
|
1,037
|
|
|
1,900
|
|
Stock compensation
expense
|
1,817
|
|
|
1,629
|
|
Other
|
116
|
|
|
77
|
|
Net changes in
operating assets and liabilities:
|
|
|
|
Affiliate
payable
|
—
|
|
|
(2,195)
|
|
Trade
receivables
|
19,079
|
|
|
12,922
|
|
Inventory
|
17,222
|
|
|
1,936
|
|
Other
assets
|
(1,462)
|
|
|
(1,602)
|
|
Accounts
payable
|
(18,871)
|
|
|
(33,102)
|
|
Other
liabilities
|
(5,383)
|
|
|
(16,288)
|
|
Net cash provided
by (used for) operating activities from continuing
operations
|
21,752
|
|
|
(31,646)
|
|
Investing
activities
|
|
|
|
Expenditures for
property, plant and equipment
|
(1,592)
|
|
|
(1,972)
|
|
Other
|
(500)
|
|
|
—
|
|
Net cash used for
investing activities from continuing operations
|
(2,092)
|
|
|
(1,972)
|
|
Financing
activities
|
|
|
|
Net additions
(reductions) to revolving credit agreements
|
(16,692)
|
|
|
34,852
|
|
Purchase of treasury
stock
|
—
|
|
|
(2,334)
|
|
Cash dividends
paid
|
(2,454)
|
|
|
(2,419)
|
|
Net cash provided
by (used for) financing activities from continuing
operations
|
(19,146)
|
|
|
30,099
|
|
Cash flows from
discontinued operations
|
|
|
|
Net cash used for
operating activities from discontinued operations
|
(6,193)
|
|
|
(10,443)
|
|
Net cash provided by
investing activities from discontinued operations
|
6
|
|
|
(83)
|
|
Net cash provided by
financing activities from discontinued operations
|
—
|
|
|
9,450
|
|
Cash used for
discontinued operations
|
(6,187)
|
|
|
(1,076)
|
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
1,079
|
|
|
(626)
|
|
Cash, cash
equivalents and restricted cash
|
|
|
|
Increase (decrease)
for the period from continuing operations
|
1,593
|
|
|
(4,145)
|
|
Decrease for the
period from discontinued operations
|
(6,187)
|
|
|
(1,076)
|
|
Balance at the
beginning of the period
|
7,164
|
|
|
6,352
|
|
Balance at the end
of the period
|
$
|
2,570
|
|
|
$
|
1,131
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents and restricted cash
|
|
|
|
Continuing
operations:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,616
|
|
|
$
|
1,029
|
|
Restricted cash
included in prepaid expenses and other current assets
|
194
|
|
|
—
|
|
Restricted cash
included in other non-current assets
|
760
|
|
|
—
|
|
Cash and cash
equivalents of discontinued operations
|
—
|
|
|
102
|
|
Total cash, cash
equivalents, and restricted cash
|
$
|
2,570
|
|
|
$
|
1,131
|
|
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SOURCE Hamilton Beach Brands Holding Company