HBB - Earnings call transcript Q3 2020 | Hamilton Beach Brands Holding Company

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Hamilton Beach Brands Holding Company Third Quarter 2020 Earnings Conference Call. [Operator Instructions] I would like to hand the conference over your speaker today, Lou Anne Nabhan, Head of Investor Relations.

You may begin. Thank you.

Lou Anne Nabhan

Thank you, Nancy, and good morning everyone. Brands XXXX Beach webcast. call Hamilton to third earnings quarter and Welcome after issued our we market earnings Yesterday closed, filed our the release and XX-Q. posted been our have Copies to website.

Sales and President today will Financial Chief be Marketing the Beach is and and & our Scott Chief Greg outlook. speakers discuss Greg Senior our Trepp, Scott Brands. will President, quarter Our Executive President Tidey. are Officer. North Officer; Hamilton Senior Q&A third Michelle Michelle and Also Mosier, Vice in American and for Vice results participating

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

release, for may in Greg. I'll Form updated obligation XX-Q, report call next on Additional disclaims year The forward-looking the now, annual statements, and which the not at all. is information regarding these earnings and our XX-K/A to risks December update over And these turn any uncertainties quarterly company if be XX, ended to conference XXXX. call our our available until in

Greg Trepp

reduce of Lou temporarily disappointing color shipping you, quarter the delivered Good third Thank on focus a capabilities as distribution our while for our Thank new a were system strength like business. at We quarter the a in our results solid half I'd But to on moment. first first, third will I ERP cutover underlying morning joining us. you Anne. provide center. everyone. to U.S.

at the large expected revenue the the quarter is our to quarter our of over consumers back customers into - ahead to market behind shortfall and shift on We focus first XXXX are Based as strong expect the us. possible. A quarter third the to last portion the related shipping demand remain half fourth of XXXX. of been from elevated the demand as to resolved year. are quarter, have of challenges results, ERP maximizing early our shipments fourth of The as on capabilities much capture shipping least we

difficult Canada place efficient expected, which driven is now compared old Small more than the beverage in in legacy than usual we in is consumers a more was market us sheltering of benefit at who the rate more appliance during system years. have While future and will approximately cutover kitchen and for U.S. than our XX% at to growing system, decades engaging a preparations. by and home the pandemic XXXX, in meals are that

Beach keep meet positioned the are demand inventory Customer elevated necessary XXXX home. at to Hamilton is this in more expect the people continues demand. transit We to remain Brands to into well have and we to order this the hand, meet high, levels as pandemic on demand. unprecedented

We for process with at We're benefiting our levels. have brands We preferred shipping well. with our held even of in-stock the the employees consumer increasing been new product is season customers our from selling many leading working and and including elevated gained holiday placements working products and levels product remotely development new products. portfolio

and team industries customers created adjust infrastructure, in Further, they are relationships in Latin Our slowly order global advantages. important robust are to members service in America competitive the and Commercial pandemic. world and business global the beginning as e-commerce the retail channel, diversified growing capabilities food our the Mexico our again by hospitality to rebounding. in retail the are new

these on well-positioned in are to recovery We markets. the capitalize

effectively Our as financial have debt. position capital we is networking reduced and healthy, managed

out down an very no That flow liquidation losses turned longer our earlier completed Additionally, We and the to Kitchen cash and year. Collection's timing have negative closed company. successful on wind business fortunate. through impact net be a this the

me in the take on are a third driving quarters, While to let on Hamilton moment capitalize tailwinds the months of our to forward all comment focus is Beach quarter. that and our continuing coming

As we in August ERP in U.S. cutover new the July in early the and shortfall to communicated expectation our At of September. the in a in July, in and offset call, a reduction were reported system sales a stages to we the last our time, we

more As anticipated. as shipping August unfolded, We entered the and we challenges persistent operating our we week-by-week, more effectively. were abilities than improved September, were

the in was quarter. too in shortfall overcome However, third July to and large August the

customers, resolved. primary which While factor us the and secondary Conjunction with from requiring the outbound customers ERP challenge both to to a to hurdle, transportation is suppliers revenue transportation, shipping and challenges inbound related shortfall. our differently. with our ERP to plan shipping persist, have industries All been challenges our was largely was which and added our shipping the implementation and

on equipment, We largest retail customers have our to with lift extended enhanced capacity volume, also shifts party have facilities. able capabilities some order and to temporary personnel adding and of capabilities. the import, convert their ease strain augmented by third helps been shipping warehouse the to our which They shipping direct

record shipments. preparing also are direct-to-consumer We for

and safety. ongoing retailer's likely closely shop to sites, on is ever are positioned changing online and ahead likely pandemic is well our An our keep globally to to are environment all come. at in positioned to course in of be retail still with for us continues fact e-commerce The health the to we're many compliance guidelines. to require global and monitor careful to challenge the months levels, and COVID-XX partners. attention elevated We with We support consumers moving protecting business pandemic order well the that

employees deeply and grateful our the from to able safe who of are especially – We healthy, stay those efforts home. not work are for to

well product a flowing of customers making being industry experiencing leader momentum providing homebound are priority we are all remainder our this of for summary, they circumstances for and crisis I forward a easier consumers. under consumers, has they work circumstances. enough folks The navigated their in be thank and employees lives occasion. distribution to are health and like to they our that brought they are centers. year have to In risen on to to have providing the under been as been employees in have propel during done ongoing fortunate recognize them immense continues I the I especially our the thank world demands to the business effectively dedication products our our essential has diligence who doing The the of My XXXX. we the of and customers and serve to keep team never and little placed teamwork Our to work and can been needs difficult is these around the the work by our them global that excellent for have the these virus. epic. the the on times. focus, tailwinds the into be to

and necessary our agile, quarter. the call who demand to Our an to I’ll results. Michelle, safety of dynamic our customers together and so the organization employees surge. now pandemic will encouraged of team work for early navigating fourth meeting quarter operating the needs turn We're keep environment and may the in. the adapt doing financial remain we is unprecedented by consumers our health our as We we're that as committed to meet our results we outstanding protecting over review Michelle, and job the the

Michelle Mosier

our faced good and how morning entire Greg of overcome has too the with organization and very you, everyone am pleased challenges XXXX. Thank many I

this on Our doing of spending unprecedented and Throughout most of flexibility, positions orders we've at capital they're the a demand to focusing a implementing fulfill teams time customer freeze have maintained discretionary our critical ensure hiring including to job our open deepest appreciation a excellent financial eliminating measures product. year, for for range for projects. expenses,

and We debt. have have balance on ensure expect necessary yet reduce effective flow navigate to we opportunistic We and cash uncertain investment remain as disciplined demonstrated the we in flexibility expense capital capital our approach to focusing sheet these working times. increase and a strong to management maintaining continue

of compared of U.S. third Now, system. third main MRP results the let decline in revenue XXXX sales from consumer occurred is the for operations Total result the continuing expected new outlook. market, implementing me and our which decreased as than review challenges our lower XX%, XXXX our a to the volume greater reason discuss quarter quarter

to the shipping at system continued demand temporarily new unprecedented U.S. our the While cutover distribution center. capabilities reduce

related also behind shipping operating and driven adversely are distribution Consumer Additionally, In the by sales at Global In Commercial demand and U.S. pandemic our the market International Consumer increased affected related were hurdles center resolved effectively. have shipping operations the ERP transportation constraints volumes and and industry we expected markets, to as softness. sales in us capabilities. The expected. lower Canadian

operating sales volume. loss million, to profit of the to quarter was the compared decline lower Gross last an due $X.X million profit year. operating Our in third $X.X

reduction to were and profit related the Selling, XX gross by administrative XXXX by However, increased a mix. offset in product irregularities contingent loss our site. of quarter driven increases assets due unrealizable These of primarily benefit lower in the to other benefits to stock. from of subsidiaries. our in to one the incentive market Mexican decline Legal environmental spending mostly increase third-party points expenses Mexican customer is in and our and third subsidiaries, to price employee the basis litigation. our general increased the an decreased to charge in reserve fees at write-off related related overall $XXX,XXX. The margin due partially and increase million costs and compensation, patent the The of includes primarily $X.X

the interest under capital, our to strong improved the we the of of demands. of improvement have XXXX, the to to is accounts The prior nine to Because sheet, credit of our revolving the of September change XX, expected nature demand facility, sales inventory seasonal $XX.X balance million for quarter XXXX. resulted compared The compared believe quarter. business, expense. the in our activities net cash our interest before to during ending the we with quarter result third This relatively year. significantly the of months outstanding year-over-year. of nine the $XX.X the in customers' inventory payable expected had compared along to the into is continue decreased consistent average that use us for lower of has months meet with quarter, build Turning as shortfalls impact September million XXXX and increase to year, debt shift working and borrowings position sales and is cash well a in fourth ended as into supports million the typically a of $X.X financing XX, million prior in for the net with $XX.X accounts payable inventory average we inventory result rates Use with flows ended our use net

Next, to let our outlook. me turn

believe measures we remain positioned to in elevated remains COVID-XX well the cost demand are our We and effectively as continue ongoing to environment management navigate place.

of cost second lower half revenue we order in help approximately XX%. operations. with total of impact XXXX of anticipated to converting includes ERP imported expect to by fall import The transportation we could approximately With XXXX, expected of growth. in revenue some the orders, $X will If be a industry the revenue sales, of direct not interruptions we recognize outlook is with while are cause direct revenue unexpected which by million, on increase would shipping Any modest For and half results half import XXXX, the profit shipping converted or challenge second the customers be customer. second line volume to expectations. higher further to strain the as in result shared to operating the by short cost the savings complication, in

some for the continues due third of $XX of to shift the Our to into activities to receivable financing fourth expected be collections quarter timing accounts cash million to could of quarter XXXX first flow of XXXX exceed to goal full-year. move revenue quarter. the Timing in the from from

quarter first unfolds. into will Visibility fourth expectation in limited. of demand the We the is continuing beyond as know XXXX strong more the quarter

senior outlook So a we're ahead, time. XXXX. that maintains expires any credit on floating Hamilton looking XXXX facility full-year a million rate Beach to revolving XX, secured for deferring Also June Brands later the $XXX

we As of of end to extend quarter, the facility. not yet amendment had the this finalized the

group back bank month. finalize were all liabilities at repurchases amounts That there to quarter. outstanding of expect a were the that the concludes current end very the Q&A. as our of note closely working with result, for We're share and I'll the the remarks. the our operator line prepared to before We'll the amendment classified third end during the As now quarter. no turn

Operator

Peter [Operator Instructions] of the Benedict line first from with Our comes Baird. question

now is line open. Your

Peter Benedict

my it's first given like reorders A XX%. the retailers of XQ sales That's of just demand? questions. implied quarter seems is couple of much future on for recapturing question. of fourth strong the One, that some growth the Curious around up loss versus expected revenue how kind from

Greg Trepp

that promotions put Peter, that to significant still quarter. fourth and that. competitors, going certainly the customers, there we a in ship third we're big in on shelves number on quarter programs shelves with to there we to had more place very online. amount of of this third in retailers But as - as we'll put fourth is is quarter. continue Greg. much hoping in the the to It with restocking was fall went that are will But to an that And it hard And which some were but so certain set into the is number a it's to out hard fourth quarter get over business exact product possible. We'll the certainly we quarter. that, who some or other have in

in expect there be first quarter. continued on might of we going some could And - restocking well as the itself that

Peter Benedict

maybe of commercial know, starting lockdown the recovery the seeing the little And take you Greg. just given given some sounds then Thanks, commercial some in lights shape the in of just, it see markets, obviously from reopening about interesting kind talk - like to you're that. you're But commercial market. a

of you don't going and it, where part seeing can I you're your what your are for what look know So you expectations forward? business else as share, that

Greg Trepp

Sure.

to is proven down pretty U.S. Europe on/off have, U.S. as drive-thru than has as to market The to continues the developed on market is European be. comes Also you and not the the some doing said, So it significant takeout again. Europe. when better activity locking as

it's equipment, the in to not to they or just again, again, after rolling modifying shut equipment menu mostly their a reordering but customers market, period completely of are get their some are there than them cetera. modifying operations down, replacing in or being more keep facilities as is keeping required U.S. So that going the run investing items how et upgrading items a out it menu yet, adding - new lot,

pretty So U.S., we're some the back throughout actually able rebound is movement China. in in decent Europe to but seeing slow better rebound And rebound up.

Peter Benedict

You on a separate it's inbound, you expand mentioned its like kind ERP OpEx mentioned mean, little bit - more situation. you the over. shipping so all that the I from of Could constraints it's feels

Just, last e-commerce as obviously when I'm bit the we to - anyway. guess the kind the how the kind prepared or volumes - get when on are we there holiday, going just be channels curious you has little that, holiday you how and just you this addressing have again pressure if you as see for mentioned through look elevates your there's to a big months, that of guys challenges like remarks. of of natural the I when the lift increase the been several a particularly in shipping shipping in

I get season? kind So and curious can you holiday to how it be don't just for you know, confidence, see level the of where it needs of product the your

Scott Tidey

Scott. is this Peter

for different couple lot start and weeks. seen of number goods number where ports our our been over supply But been a - sailings that challenged. of been inbound in delay there do got with inventory areas from of have come where and definitely lot have chain a a center. a has have We China. of of a we've we We've distribution in inventory a think, I the - supplies

at days that picking from can our year docks most their see to try to to up this now last XX two equipment time, of If up our at in. that equipment orders We you to pick were to get be retailers hours. on probably look XX anywhere XX had that in sending we and

well those do through lot think side. we're worked congestion it there some a e-commerce on So on the We've of our constraints. docks. is positioned I is,

of is trying some increased get Our retailers of to facility some units that to and certainly ship ability there think we're of a to our same don't we has that they're inventory equipment. to lot And this out our getting the for when distribution challenges of demand. ready

I seeing challenges in start the we'll inbound that, the side. on more couple think relief outbound will then some side for I think weeks on December. continue and And So the a

Peter Benedict

now Okay, not I And experiences last look, know just a systems us the guess with times. we ERP be could come of confidence tell But now you're what are ERP hear just that and three first company past the anything implementations. I kind that months? confidence or on case? not couple the this, the to the What going give call, gives this - in have would can to the us up last, we're of that about you you

Greg Trepp

Peter. Sure,

the play getting we working met the of requirements had all going assignments And kept and longer fixed, plan to a say kind were just we things okay, game here's then through and we and and some up. the to and think than and last is do us those backing call a plan, of some surprises of had the or time, you this challenges really some really just thought work people where So had we challenges out. persistent just took all of

So we look ship we is specifically news those at how issues, back we performed when in day-to-day-to-day, just good the were in in having you I October, as not August. think we're like have September,

a about And in impacted So being it's negative running how up? we're the you with really day-to-day - system how the some where basis, became of deal the not then And you a But do it catch by just well. more facilities on way. ERP congestion.

Operator

this to call Mr. are closing questions for over no queue the further in And comments. Trepp Instructions] time. there at back [Operator I'll turn

Greg Trepp

Thank a COVID-XX to situation. through remains challenge the manage you. It

pandemic. navigate to have we However global demonstrated ability our successfully the

in we has. company capable what each merged global time. is remain before, pandemic of consumers and and with agile, a have able crisis and needs the with committed customers employees the demonstrated our and to our to team to safety dealt This to and needs our challenging We not company together a managed clearly keep as meeting past have as to the we situations our the we organization well-being work changing stronger quickly While and all circumstances. of respond through

future the addition healthy continue spot optimistic appliances, demand. In people our is this that All the signs ongoing of our have excited momentum will to year overcome challenges place, as our year, and kitchen demand continuing again formed industry habits benefiting XXXX. in drive unprecedented the that this today. pandemic faced to finishing point to we increasingly joining call shelter are from all post sweet strong for been some Despite and on optimistic small and our us in business. we this and is you about Thank into have the new for

Operator

today's concludes This conference call.

now may disconnect. You

Hamilton Beach Brands Holding (HBB) 10 Nov 202020 Q3 Earnings call transcript