HBB - Earnings call transcript Q1 2022 | Hamilton Beach Brands Holding Company

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Operator

Good day and thank you for standing by. Welcome to Hamilton Beach Brands Holding Company Q1 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your first speaker today, Lou Anne Nabhan, Head of Investor Relations. ahead. go Please

Lou Anne Nabhan

release Good XXXX Kris. the Welcome our available XXXX to closed, the XX-Q Thank Copies SEC. conference morning, call quarter are earnings quarter first earnings issued our after filed and first our we with website. you, on our everyone. and webcast. market Yesterday,

Scott Senior President, in Greg Chief Financial and Sales are today Chief the speakers President will President and Vice Executive Also Vice participating Tidey, Officer; and Marketing. Our Trepp, and Consumer Q&A be Michelle Senior Mosier, Officer.

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

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

Greg Trepp

Good first everyone. and outlook Thank an Anne. minutes for of year. provide us. in the next morning, to XXXX Lou Thank few to joining you overview performance our We're quarter you, of going the for take the our

to in last due We industry mostly demand that previously with year. are slightly in our than that quarter. revenue XXXX, We said line to the would pleased comparison was expectations, first stimulus down slightly softer the be spending

partially the pricing that we was volume historical which Lower significantly by also a higher actions last was our quarter during average. quarter. year, effective Additionally, than sales became comped record offset

a us to significant product transportation of Our and amount price increases increased offset enabled costs.

supply certain faced from We from containers order at demand third some to meet to challenge quarter call, margin. in a our affecting commitments customer of the product the chain move and resulted containers to the of of a inventory, during China of premium delayed turned of number China which we at XXXX, quarter in elected importers rates Persistent XXXX, U.S. in contract to XXXX of discussed the constraints for rates. enough first the securing short-term consumer shipping second I ocean season. half portion in secure selling holiday all arrival like As the

transportation than Our XXXX over our be containers pricing More the to hit premium first costs, we out we first outlook. our pressure impact the strategy when these being in covered also spread product ongoing expected of and and of the first half. quarter a XXXX communicated the half spot

second us. So quarter spot containers we think the will pressure behind from these be

to will not We going today's impacted product by that loss. also -- mix. not Michelle add quarter -- moment. all margin up, for first based an were pressure also When is we a ongoing issue believe cover geographic you unusual this we in is us it be on

we recovered for recent are the moving working how keeping Our I the ever by delighted our customers. to worked diligently as pressures has inflationary job to distribution relating former this from on possible quarter In times teams satisfy impressive some policy. through It of manage challenges recover of insurance is $XX business an our us chain Mexican our memory. challenging shareholders. needs operations, our prior forward, the as and sales our has of enabling crime by together million of they team losses our and subsidiaries. the supply the done in recover much and gratifying XXXX, constraints, effectively team track most am to year with employees to transactions to associated the the be unauthorized Company and and first value able effectively very and Despite a as

designed to business. needs combines We implemented is return a March plan best employees and the implemented of of the we our desires teammates, have our balance our a environment. office we with of our post-COVID For the believe that and in that to needs plan pre-

we well opportunity we sale include home in and our core Proctor many will to commercial, provide Hamilton that achieved long-term focuses goal and market our on presence XXXX in expanding believe markets value and working our on and as to each premium, Beach successes higher-margin higher-priced, XXXX. overarching one focused strategic initiatives markets with are initiatives We six our Silex where creation. are products. wellness of have X growth the our These our build the of in on These the initiatives as health support our increase of brands.

The other two partnerships digital markets. initiatives transformation and acquisitions. our accelerating include These support leveraging all our growth plans in and

one. discuss Let me each briefly

initiative is newest market. wellness, health a This XXXX. added multibillion-dollar home to was initiative fast-growing and expand Our in in

We home on categories. are currently air the focused water filtration purification, and medical

an we took to for products The products, During the premium a quarter, the air is and steps of the trademark the past product Clorox brand prepare introduced replacement in under announced Company. areas. part new Clorox multiyear launch We've licensing name exclusive three of This many in we first agreement In progress purifiers we filters. year, key of first line the these have markets. introduction new with

have Currently, models new available. X.X have are true tabletop favorable room Our Both and all and large purifiers filters. air received have ratings. reviews star HEPA models

additional the to have additional of try launches sales Further, deal as we season months. products We difficulties consumers marketing summer digital new The and to a April. anticipate these build with developed the season the and sales. wildfire be in March coming have we allergy sales strategy as of supported and robust in a awareness. category in drive to generated spring awareness We scheduled build to

an connected that HealthBeacon, of sustainable smart patients were medications to a technology size and first the a Under next multiyear store launch a We March, injectable regimen. in Smart Bin We include Health in medium launch of to significant managing the we is appliance and models Bartesian the New year. countertop way the yet from major our new to through companion models care a contributors the multiyear year medical The agreement CHI market entered the premium exclusive developer system in the products a room Sales agreement system distributor HealthBeacon. personal that We cocktail the medication tools marketer serves three U.S. countertop leading services. as from The team. home. water and for and to this for trademark to for were launched line our Canada. use U.S. the with with Revenue announced that a recycling. grew integrated by XX% adherence voice quarter. of home Gaining Canada garment of this of used plan at share Sharps the In app an are managing machine assists we appliances the by launch that Hamilton and agreement, into system appliance Beach in their supported needles includes powered licensing later a is the Brita premium focus plan market entered growth. exclusive in year. the products

with Professional generated agreements also marketing further additional We presence by our digital sales Gourmet We premium Beach Wolf licensing the our in expand and and pursuing collaborative product market development, new brands. increases and other arrangements. to plan for Hamilton

in Gourmet our sales growth generate of brand We expect additional appliances countertop Wolf XXXX. to

Our newest selling the temperature Gourmet product, Wolf true is well. kettle,

are extensions This are to model plan upgraded including a under Line model, several plans in Recently, grade machine, at making launch which we months. that stadiums. baseball coming introduce appliance suites cocktail our year. premium premium it growing. Entertainment two of enhanced & this Bartesian to the Bartesian the the placed in Sports generation garment CHI functionality. luxury brand will provide cocktail development, are Aramark products commercial the announced has care installed For Sales

iron steamer. targeted introducing products in to for our new brand, products which hunters. many New the and line Weston a the include is and gardeners We're handheld mini

New sealers. dehydrators meat slicer and items vacuum include updated models, and smokers, food grinder

our leverages cooks. Our of Hamilton the expertise for benefit Beach home commercial products Professional line

New products Pro stand include programmable hand and coffeemaker, HB mixers cast griddle. air fryer a ovens, iron and a

the important globe. service The for the pandemic-driven higher-margin of softness Our industries. of in the and provides opportunity couple the outstanding around North needs while the in food market market America has global an accelerated the lead in last rebound quarters, commercial from initiative customer hospitality meeting global sale and commercial of higher-priced, products demand to

strength expect continue. the to We

names. the drive new product innovative will This and Our on new to core year, We to the aimed marketing of drive plan brand through offerings flagship growth. higher digital products is products coffee $XX our stand Other e-commerce in brands, introduce Silex first number a price We're new a we defrost new last air [indiscernible] first fry flat models growth to are markets initiative progress we're development, these mixers, recedes. accelerate number quarter, consumers focused Proctor category. We're as shop the blender quarter, and and sales our and the slow-cookers under In making Beach transformation. cordless for rechargeable pleased year, several include the were watching our ovens, include approximately Hamilton sales at Every point. personal new attachments. and can overall pandemic e-commerce digital in new and XX%. year's the categories. stores more products increased as appliances hand toaster that opener fry have with in of air In

would to that additional E-commerce and current our So quarters. growth agreements, brands strategic total was identifying our all to for promising and revenue drive To the acquisitions, we potential. that year growth performing sales close prior our in we're trademark actively initiative an with summarize, accounted accomplishment. in exciting in have and acquisitions both typical of partnerships engaged comparison company XX% markets. With alliances portfolio of an licensing leverage

for a our base does revenue Operating believe potential. revenue As We initiatives, pace expected of growth. represent we're our than profit momentum is another all record at improve planning to we outlook drive case not year for our of full faster our growth.

the more appliances the spending solid, Industry softer kitchen higher to concludes, we're small slightly remain unknowns and headwinds than Once demand potential be prepandemic XXXX. to down remains taking prior to many last given to stimulus and demand year's a from this conservative levels. ahead prepandemic expected flat levels, comparison year, for year than slightly is However, of view.

means to any a We're healthy times. consumer evening return work, interest now more preparation own engaging XXXX on to consumers marketplace as amounts reverted still significant to potential monitoring at lifestyles to consumer behavior home, Even and control as and new a as to spending well habits. pandemic, in during negative demand is activities, difficult prepandemic At-home driven inflationary in due from of home closely predict. The beverages. heightened to during formed meals any have weekend away by inflation. meal expenses are being and habits preparing shift impact Consumers the eating offices their as is time

consumer point, While small we holding short-term this over comp downs time, we Depending demand for demand appliances inflationary could XXXX Inflationary containers. dynamic up been it durable we expect be pressures, have today. The has outlook. as soften to environment for on well. supply and and revisit and commercial and ocean costs, activity. our is would from unusual pressures where for expect been retail ups unpredictable. increasing it transportation it If shipping does, remains we product especially chain At

been As to our doing, mitigate we turn the now on And fullest over extent. I'll impact work have the diligently Michelle. we the margins call possible will to to

Michelle Mosier

good everyone. and Greg, morning, you, Thank

costs and XX% Let Overall, results market, was sales increased which by in significantly. markets, last net as our of several with quarters and global that increased record Gross demand decreased Higher a strong or and XX.X%. offset expectations. positive our in customer product the primarily industries million a Greg XXXX transportation discussed. In last to compared quarter. Net with premium impact discuss spending. outlook. rebound top quarter increases, compared containers price was momentum our our hospitality our first growth from XX.X% Latin In to mostly revenue The margin market were Revenue global due our XXXX driven to higher-priced, a service American first U.S. less and line erosion decrease very commercial stimulus our revenue X.X% large the the pandemic-driven was the me Margin favorable and food product higher-margin margin a market softness. performance line continued $X.X of then compared I'll was compared to the commercial by growth, to products. and shipping in to revenue mix. were million, had our quarter discuss Canadian for on first year's $XXX.X extent except XXXX,

balance included million. of changes to sales $XX.X The the current general was to offset with million, April. and March. million related within end and was year. increase was insurance were Selling, sheet commitments losses were flow in compared America, Brazilian claim first losses outside this Greg $XX.X incurred SG&A Latin is subsidiary. in was fidelity on cash service Other to to quarter U.S. Canadian increases expenses profit lower The Latin of American markets. lower on favorable our is $X.X as of orders. recognized claim lower-margin and the liquidation expenses million policy inclusive market and in and was our direct and approved current the $XXX,XXX. expenses includes compared administrative expenses overall insurance $XX losses of the million operating compared filed decline receivable and in by activities recover of price in in However, including general collected the due prepaid $XX.X sales In the expense our administrative currency This insurance P&L. to The statement the We due This discussed. employee-related assets maximum. lagged was of up expenses to costs. maintained and other selling, in last million the long-term reflected in The import in our that receivable Operating currency recovery receivable recovery, assets quarter. Also contributing to other a in the $X.X

of met During committed sale. classify the fourth Brazilian that subsidiary our determined licensing the criteria enter decision as the agreement were to quarter plan of the liabilities for all during the the The assets a XXXX. the April and as sell amount held to into down used market. it of and held classified XXXX, made assets In carrying to and we subsidiary we second quarter XXXX, the serve to wind a to and

$X.X with In $X.XX criteria substantially quarter resulted reported higher-than-normal each the During were in or compared expenses, compared XX% of of to the to net being stated currency $X.X share. recorded share accumulated and other into previously effective in We met. that effective net or XX.X%. $X.X of expectations. losses million million XXXX, discrete liquidation $X.XX This first was released previously comprehensive first reported year's tax of our other million line for resulted per losses diluted complete quarter this for The foreign diluted items rate tax income rate. period, income we per in

compared collections was use for net XXXX. of cash in Net million to primarily operating year. The Now used working balance was the and in accounts compared I'll to million quarter XXXX $XX.X was million our timing to $XX.X trade in XXXX, the cash due of increase in prior cash to $X.X compared for $X.X turn receivables activities sales year fourth XXXX. compared flat sheet provided net year-over-year. in XXXX payable cash million in the and to inventory capital, an decreased the and cash combined Net to flow. of prior a which $XX.X In of relatively million due to cash was million of used a change use of $XX.X

from $XX.X the net capital At our end last times expenditures inventory and distribution increase an quarter, end to XXXX, million to the new the of longer resulting supply due chain quarter prior the in disruptions end to first decreased compared resulting due did Capital first million from to spending $XXX.X million year's to the the that primarily end of However, year-over-year. for XXXX $XXX.X $X.X of in compared quarter and lead first was center of to million in increase recur. debt not inventory transit compared $XXX,XXX year of XXXX. and transportation the at

Now to turn let me our outlook.

action pressures, well rising uncertain. and including to of for of Timing and We're executing persistent a transportation any inflation. costs, mitigate constraints margins protect chain supply environment. remains external impact taking is difficult significant product team the evening these Our in operating pressures

while all Amid fullest future taking recover pressures, acceptance. margins focus may working price we Our will able pricing responses capital with increases historical lightly, be additional units necessary possible. within the with increases We pricing include and ranges managing monitoring retailers not We remaining to extent never we're business take marketplace on and across all cost to consumers. also and increases competitive closely these initiatives.

full growth further to deliver initiatives with XXXX, modest we in progress our the compared revenue XXXX. expect For year to record to strategic us revenue enable

XXXX, first revenue expect the of decrease half For modestly. we to

moderately. second of operating $XX revenue the increase year is recovery, increase For expect by half to to expected the revenue. mostly including the Full XXXX, higher we profit million insurance significantly, driven

acceptance in at stay on include demand, the supply our back That of change to price of could concludes inflationary COVID now turn depending operator These the current increases retail on chain we'll protocols worsening and constraints, line pressures of and impact prepared further factors. offset impact China consumer home remarks, Our costs, outlook Ukraine. number and for rising in any the conflict habits of of to a Q&A. the the

Operator

first question comes Kleber Justin of of [Operator Instructions] Your Baird. from line the

Justin Kleber

Everyone, it's Kleber. Justin

wanted off, think remaining is talked in past how to First the pandemic? guys the ask a indications Greg, about mean years? seeing unit overconsumption that's demand the for any do result you been as forward I you pulled which But about you, solid, of I of encouraging. are two this category you demand category

Greg Trepp

holding so think it I up. so has Justin, been far,

lot window moved there Easter year, mentioned of the seen demand. that the of for last period. and around. first we There's a ago stimulus as earlier, in deterioration to little have of put the a we certainly bit couple a of prices As X there's noise year significant gone XX unit was not up, really have where this weeks checks year

home, more, of for you were with course, lot I and -- a into And also millennials a to bit those on But big prepandemic was household that factor things now, are days few home read. they're it days. of formations, during so hard staying also a the and So people going continues moving to staying little of companies hybrid a but people of makes for that working at pandemic, often couple know, were also think go. a and as home were

at-home there than to going was more there be activity So prepandemic also. is

There it's are up. as held so a So, moving far, of lot know. parts, well you

we're appliances going some of seen watch far, we closely. or have overburdened a drop-off But being it front-loading due with to significant to so So yet. not people sort

Justin Kleber

Yes.

going I Okay. maybe up consumer you category, related, right? somewhat going the in of And are just product. That mentioned makes virtually the sense. prices across kind mean prices every up

guess, are indication It pushback trade-down but really doesn't maybe way, retails. any seeing, to price seem So lower you to customer in that to date? higher I any of response points

Scott Tidey

Yes, Justin, is Scott. this

I do accepted we're adjusted been that think been up try to hand $XX that at what retailers the retail put that hand that. for I so I seeing the and to about, prices by rethink far, I starting if are The moved we $XX or to and from had marketplace to our need online think mixer. reset retailers. I like feel account have still through mixer have the prices that's $XX, the a okay, store

at really Beach we Hamilton back that those have has value So the propositions. is and going across -- we're thing the nice looking offerings all all

better So luxury the best even in we're and good good, and position.

fill that So looked of are being to today. retails at able back go we we abandoned spots and have products because have have retail going are that to the those in are up, as been fill those gaps some and

Justin Kleber

kind for notable run about Or a just timing customer on the million is in year? balance the that The commercial. should from for figure good second anything $XX thinking the half this last a The we $XX step-up unique color. question, perspective figure in of of this the year. a this next quarter, Greg, from win? great or rate in of quarter there is strength million new That's be revenue

Greg Trepp

a or we've have really not and win there There it America, our Well, it all back hospitality they're now lot were And business, food shut large got that they're was of opening on at trying when to equipment-wise. -- well our up down very related as very good hotels. we service is really, we of either is business time focused period And catch as drove look strong up, one-off that. demand. North globally broad to and showing a a restaurants

So and least year accelerated quarter And the to as projection, go-forward to the first really continue or backlog in we we likely growth and well to came be building another sort when it at seems it seems at be with two. into as for look of widespread quarter.

looking to But strength. see hard like get always two or quarters so out. three too to it's should it's So know much you far, continued

started us at goes third second so against we fourth in get bit the quarters we're as year, help some quarter quarter little now quarters. right on. up a least quarter, growth a But build harder very last should comps Now the to year that a and the pretty soft rate more in strong couple for will have

Justin Kleber

That's great to hear.

or that and lot health or or the to just year is is in you could revenue meaningful mean your categories, health over the initiative next X? exciting home frame opportunity the home I company? total mean wellness of and On a view space. in characterize the way from the this -- I this developments any broader there

Greg Trepp

goal I is I in make we feel eggs deliver here. it to -- at I Scott, face with don't good -- have The the certainly think on one for think what about do I'm Scott effort. my smile expectations our But looking all a mean is

is an Water one, So a electric share is that win of but appliance a certainly, is breaking not have business huge that to new still existing we're but our ground some strong is at, that there, it's established or purification category. with a air so those to there. be going we proven out countertop demand

got when to they devices. But got but sorts of consumers water have pitchers need a you're their So educate water people certainly, in you it. that's creating refrigerator, why great on upside, all category challenges,

to improve And you really that for only exciting dispose real People really the think do And app one their a market. which as allows brand-new now. a of there's things example, caretakers. HealthBeacon, an is is injectables good has to adherence, So is of then this that there. opportunity an are doing the we sorts all

If child you've or really, we've thing. you're or But it's people parent a or got again, educate monitor new -- caretakers. child to a and exciting an that got trying a to educate that's and

generate over and think So and three about and I growth uneven very there that starts, think mentioned. to probably next the will numbers activities of I portfolio which will I nice I'm sure growth years, will be but course probably the fits pretty the and to just excited two lead be which we're from I'm one, going follow, be we but not feel of the ones ones and believe the there. good about

Scott Tidey

will that Yes. nicely in very these Justin, about, into, online brick-and-mortar segment Greg categories And I just add, water getting and talked an are balanced air that perspective. the and we're the from both

infrastructure can got So these segments. the add share that And help feel again, they good we in a then consumables. that we like have just also have come build both also with

walking just selling then that is engage not focus which but years get trying appliance been for with with to from the the to consumer and come to the many another to, So consumable. away continue that many, we've consumer,

Justin Kleber

Yes.

me. Okay. questions Two from more

year's holiday selling you guys China, on trying been and magnitude Just various how this feel understand the time ability given past about disruption just inventory the your lockdowns with in few flow And to at today and points season. years? here you've dealing would versus of to over the ahead chain of secure supply how product what you in characterize

Greg Trepp

Sure.

situation. to a But here you about of little things XXX up is China. news, in far we expect So give that of seem I'll harder first a all, That's -- pop always for it's a the talk -- flavor on and Again, we basis. current employees good go-forward the have so about. to sort didn't

that the but in impacted, way So will companies navigate a some really it are we on us folks have help ground maybe that don't.

been a very, many in been very years. huge China for A that's benefit. strong with us team that's So

We supply have very base. a diverse

So range two which, a of suppliers, on we one rely us are wide particularly. again, spread out have doesn't over or

here be a through, a the Hong they've to us and yet, into and there now short to period time disruptions a disruptions they Kong weeks rolled time. up And up these so for way in in or shutdowns a supplier tended and of have been a have to on massively far port Shenzhen, and were few our Shanghai as a not Beijing, moved They at fortunately. have disruptive supplier or and

ups is So and we're some going nothing dramatic. to downs supply, but on have that

us year goes and if on, down of port right issues, period course, of work still required and of from been happen to build moment, it's keeping for we during customers to a Certainly, appliances the a everybody. At for goes time the the of might people for our as back Hamilton small something the Beach, manageable. were bother standpoint season, lot longer hard Now that or the it's by but been peak those come manageable supplied.

Justin Kleber

the guidance to Okay. That's to profit for this year. on for operating good increase hear. Last question Michelle just maybe

do mean the expect I be that you recovery, insurance the to exclude case? you still If

Michelle Mosier

our moved Justin, year-end. I haven't guidance would say we off from

significantly. the just So maybe remove word

Operator

If to no President there Greg Trepp, back time. are like and this further to turn CEO. I'd at the questions call

Greg Trepp

Thank you.

many proven address we're demand. reasons. facing we As all We're industry. leader our for our the we look ahead, in is durable There even ongoing as optimistic industry businesses, and a company, many challenges

today. participation increase commercial our taking premium, our to Our many us all as product offerings, comprehensive which broad call. effective and through as advantages, portfolio work will brands, global for experienced of performance. key available enable prospects health growth the That as to all we report profitable that you e-commerce initiatives. our competitive across team, execution and Thank range time capability well-developed maximize infrastructure, home believe markets trusted our about wellness the for on We're concludes product join our our our We're focused our our channels of we in excited relationships our well to retail be core market. are

Operator

conference today's for call. concludes you This Thank participating.

You now disconnect. may

Hamilton Beach Brands Holding (HBB) 7 May 222022 Q1 Earnings call transcript