- Earnings call transcript Q2 2022

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Operator

Hello, and welcome to the Hamilton Beach Brands Holding Company Second Quarter 2022 Earnings Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Lou Anne Nabhan, Head of Investor Relations, to begin. Lou Anne, please go ahead.

Lou Anne Nabhan

Thank you, Lauren. welcome Webcast. Second and Conference XXXX everyone, and Call morning, to Quarter our Earnings Good the close, SEC. after filed Yesterday, market our earnings second XX-Q release, quarter with the we issued our Copies on are our available website.

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

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

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

Greg Trepp

morning, you second half. quarter, minutes our Good good the to in Anne. few Lou for the performance outlook everyone. discuss next us. you, for We're along to the Thank Thank our take going second joining with

with results, to another in global revenue of the in except the line from a our quarter strong. comparison the and in ongoing with which to of food our Canada. global [Indiscernible] expected, of all continues execution achieved results service [Indiscernible] and of driven Last We strong benefit industries. increased commercial American This In revenue second in The We strong we quarter our margin team are hospitality be year's Latin [Indiscernible] to continue environment. market The against market, nearly our was demand the XX%. demand declined markets. a difficult impacted rebound XX%. by commercial profit demonstrated our U.S. Revenue, consumer year, as 'XX, growth external were in in our softness strong challenging record gross pleased operating quarter which and increased our sales expectations.

expanding commercial, all with been our [Indiscernible] in focused of to initiatives higher-priced, growth the the generated Beach We of to our in Hamilton Silex. new them markets. where on strong We've we the believe build in beyond. and quarter. of Proctor include presence on of focused are increase premium, on and We're XXXX and Several in opportunity health our initiatives. strategic products. generate brands, will and working [Indiscernible] markets have home sale These continue progress our to growth our progress each make higher-margin also the wellness core growth second

Our on focused second [Indiscernible] and accelerating are partnerships initiatives strong. the quarter, accounted of leveraging and remained In our going Online acquisitions revenue e-commerce our very XX% well. total. increased and for transformation

in marketing accelerate our quarter revenue global online investing second transformation to all plus markets. our XX%. continue and brands by for commercial capabilities was growth the digital digital and our of We selling I mentioned, in

in customer products. last CHI and strong this We popular the market From our garment our results quarter. global particularly matched brands with was Cocktail product participating premium digital chains. relationships machine and for year's increasing in marketing and are care also regional our Bartesian development, second Growth with extremely

seasons. a in for new number time the selling introducing are of We products holiday

We are model X-bottle excited to a a X [Indiscernible] and launch as smaller the Duet, Bartesian as model. well Generation the commercial

X.X slightly. Silex, [stands], the our Beach online declined core to better. reading all of or comparison X sales have Proctor includes stars portfolio X and brands, to of year, last Due premium Hamilton Our an

number price continues rating. consumer-preferred in season. has the sold. on in be points The units in for the to However, we based expect both and brand It growth early the one for and Amazon extremely are selling X.X-star products. held Hamilton multiple launching Hamilton we XXXX, new awareness did Day extremely in the third categories The online year's categories during and average brands with brand Prime products well serves Beach innovative U.S. this of quarter. high a brand Beach range holiday

press that Amazon it announcing [Indiscernible] Pride biggest a and was the highlighted Following that was worldwide Day of they [Indiscernible]. ever. announcement, release Hamilton brands Beach the event, issued the some In

rating. us, portfolio For to Proctor a sales and best that our average year doubling this has with well is was ever a compared brand broad nearly Silex year. our a X.X-star as last online

to continue in positioning introduce our as Series products throughout categories. incorporate as We brand well Platinum of broad high-demand line Better the a Simply range

launch agreement entered in We plan an with at-home XXXX. we name. [Indiscernible] throughout medical license, gaining is year a begun next multiyear the for year, trademark launch air year. in launch in meaningful market. categories. -- Smart filters powered large next products growing market. in We new traction and early for and have spin and our new into to where appliances progressing Health into also the line side air We [Indiscernible] from air Clorox Health This forward and of initiatives are first under Smart have Our management products Canada by and U.S. new licensing we the purifiers of market purification to and care products year. We fast additional We have the consumables one a look launch coming Wellness plan new countertop Hamilton new the particularly this as revenue, home launched to of Beach Home filtration in the a water months. models to plan Brita This water Health products. Beacon we line [Indiscernible] will home to injection purification the in [Indiscernible] medical exclusive Sharps the for Bin

that was within Turning profit margin. gross above second last quarter We pleased were year's it our our to well back historical range. and

securing higher have cost, increased ocean mitigate Outbound as product demand have programs all a efforts actions, containers Inbound become been portion of freight shippers. at to of transportation rates pricing significant costs well a trucking and high Our a successful. significantly including due freight the projects significant challenge. the with reasonable for number have needs to our costs by a remains

overall container were ocean come to of down [Indiscernible] rates this seeing significantly recent are rate we [Indiscernible] demand than benefit commodity the begun costs. at We've somewhat from as year. While time abatement they last higher ease

overall increase However, product are significantly up container in given last the rates, costs compared to year.

that higher are We continue we for the our are covering retail additional and focused effective will work on customers. price ocean costs, become we the quarter. the with rate in third particularly carrier Currently, increases implementing increases to

margins in We competitive. levels while expect successful historical staying [Indiscernible] increases to are be our maintain necessary at to that

an primarily significantly starting headwinds to conditions, half small kitchen retailers to remain the first discuss appliance industry Demand year, the to year's despite comparison the from of down I our that environment. not in Demand adjust period year has of for last unfavorable slightly number compared it but expected a pre-pandemic to last demand In year compared continued [Indiscernible] tailwinds was slightly Next with current but will demand. the be business prior a same for spending. to dramatic of in to the appliance the softer second the are is of as due consumers year, second the economic kitchen strength industry the economic half half, softened supporting small decline. ahead believe growing the levels. has is and previous outlook We

continue many part adoption in has lifestyles, as back has as people breakfast, and broader and small as quickly to friends First, school, home of engage other prepare in and offices than during kitchen moved good appliances with children is are pandemic to who ever. back. engaged Large others and the accelerated they and to for folks tasting work These Significantly, are in with the workday kitchen more of have snacks; need and consumer the that occasions continued least, working meal lunch gatherings non-lockdown the for even the able appliance deeper holidays needles beverage were many at third, [consumers] time. pre-pandemic; receded. are to be at-home important to family small preparation healthy from for secondly, category pandemic consumers as the or, continue

appliance the this small of benefits category. All kitchen

in remains the History people now money because consideration given living. true more eliminate Another to the increase cook makers, inflationary small which the small used home, [Indiscernible] that heat difficult small softens, not advantages performed the been [Indiscernible] is we continue and a even as Beach products to economic that stay appliance are especially industry it's of and downs, save other strong difficult times on When market has in us meal quickly returns in significant number economy do to times, during tells strengths economic to like and extreme coffee and the industry food away-from-home Products industry and costs. spending difficult essentials. There of those competitive expects short-lived. been have steady count brand good times. kitchen The found as XX from ups benefit to pockets have appliance essentials. analyzed during performance. Hamilton of but times. years data both consumers

events. prospects has the And are that in know, in we macro are be about environment that year, outlook. on While strong point, based a our we for this we feel optimistic of [Indiscernible] what there uncertainties up. second confident half consumer At our we recognize can been the [Indiscernible] holding

Now I'll over turn the Michelle. to call

Michelle Mosier

morning, good and Greg, you, everyone. Thank

year. to decreased results discuss million XXXX I'll me X.X% a then the and sales discuss compared second our Net Let $XXX.X XXXX, $XXX.X our million of record quarter to compared last quarter second outlook. to

for of gross markets [Indiscernible] model to revenue quarter, margin in in we of last most to product full in commercial increases XX.X% on decrease in the quarter compared overall price government prior due of included of checks transition the the completed improvement prior consumer $X.X Offsetting partially. In year, businesses of stimulus primarily the discussed, decline the licensing at profit in China, to to [Indiscernible]. XX.X% to million to which a our consumer U.S. a a our in and revenue Greg a year, transportation Also spend, is impact favorable As increase higher costs. offset markets from our total compared from year which end model market. our decline global contributing a with consumer consumer Brazil the that and company-managed second

U.S. year significant was prior decrease compared new general million. primarily storage the to $XX repeat charges this The Additionally, center. due our not expenses Selling, incremental year. carrier did incurred included to distribution relocation expenses administrative during to $XX.X a year were that last million and

had Additionally, compared result stock to our in for months last lower $X.X XX.X% was outside to inclusion a as year. the able interest on million unrecognized services a price. expense. ended X matter, and year incentive penalties high compensation prior and the tax unresolved and interest and the second of in benefit reverse overall employee-related The penalties year. were declined we In related our change compared for prior this was Operating costs effective [Indiscernible] previously tax quarter for of was lower we $XXX,XXX tax discrete the of profit XX, to Mexico expenses rate recognized. due accruals June to decreased position a year, due the an to a as to And

approximately rate rates our be discrete nominal increased our have was Excluding this we we higher XX%. expect from as to effective The average with some We to rates Interest under facility. for slightly well interest amount expense rising items, response. as due outstanding rising revolving rate year credit our tax interest believe $XXX,XXX. increased protection interest borrowings the

under repurchase income compared diluted December share. we shares quarter diluted [Indiscernible] shares XXX,XXX was XXXX. repurchased $X.XX We July per repurchased XXX,XXX share net have for net per or $X the XX, stock income runs $X.X or our through during approximately approximately Through XX, quarter, million. which the $X.XX second program, million of current For to

sheet flow. to turn cash balance and I'll Now our

in used the million $XX.X months which a a for $XX.X use due used the [XXXX]. $XX.X compared to operating ended operating $XX.X provided prior of cash of source of for activities XXXX. of year. cash of compared payable prior For to collections the cash working net year. Net $XX.X in change to by accounts cash $XX.X compared and was of year, capital, was the June year was trade million net due million in last in activities million The this cash XX, X combined to $X.X This to compared sales net to cash decreased of million primarily and million $XX.X year, was million XXXX, million receivables provided inventory timing

to factors, XXXX late of ocean attributable last some of is slight to production compared [Indiscernible], season related to robust over store position several and late transit from elevated [Indiscernible] the re-tailor and delivery production, levels time, slowing rebalancing increased inventory stocks the programs. across year's demand and Our

on other and a stock near-term levels While orders our retail having stock impact products a are position, not categories overall. over are in

Our decrease inventory and investment expenditures for last year decreased months to our order placement management. current made through U.S. X end for the significant $XXX,XXX The to to this compared due year distribution of fall purchase was [Indiscernible] levels by first Capital for the significantly million last ongoing center. reduce year. we $X.X new the the

higher in We will [Indiscernible] the expect compared $XX.X $XXX.X at year's our in come. end $XX.X was the to the for years recent many million us was capital quarter, benefits the end provide investments debt working years, net last quarter, with of [visibly] end infrastructure ERP The net position. due of of we've at and system made year. the our million At million to the last to second second increase

let turn our Now to me outlook.

and impact transportation of a product in persistent operating internal environment. well inflation. actions supply protect We're including constraints the chain margins costs, pressures, to taking challenging execute [license], against and significant to continues team Our

still is to provide however, slightly grow, continued half from expectations strategic for expected a of strong in are softness. Compared more somewhat expectations products of has for to core consumer outlook, Sales and commercial XXXX conservative our rebound expect Our demand. we XXXX. been our previous initiatives [Indiscernible] to business our the growth to for outlook solid, each reflect pandemic-driven adjusted sales second

expect to XXXX continue to of compared the half half the will We modestly that XXXX. second for second of increase

includes we of XXXX. continue compared expect for the The first operator We'll That line XXXX, million quarter revenue in growth concludes back to this prepared significantly turn the XXXX, year compared expected increase year. $XX profit in insurance remarks. is full to to the the modest operating to recovery For our revenue to now record Q&A. the which

Operator

from Our comes from first question Justin Baird. Kleber

Justin Kleber

Kleber, Justin It's Baird. on Congrats quarter. the

across first expectations. looking mentioned your markets. ask, in XQ, case if off, and consumer Greg, Just both was internal at the that Curious commercial you on was line to back wanted revenue with

Greg Trepp

yes, Justin, basically, yes.

higher -- movement and bit retail basically thought a little in within at was retail I a think than the right North maybe there's but little of was America, between across commercial line. we

of I last where because thought we retail big think overall -- right comp is such offset to on mainly here had from we the year. around really a and side,

Justin Kleber

Yes, okay.

more within consumer, initial business? the better from the I on expectations commercial performing You case? you how given half your plan. within the like for? are today though back makes kind cautious the sounds approach mentioned those Is environment, of maybe on than we're going retailers, planned in compare hearing year think to in for of everything Curious what you're we Or a the sense that bit It initially a line that segment just commercial specifically. the

Greg Trepp

the before. Well, we bit. keeping And strength chasing and base to on potential is I outlook it's our we of we're upside [Indiscernible] being at line as at a [Indiscernible] we But know, commercial the what real exception. expect. sort right in would -- there look with But our globally, Justin, thought say, often China with think, certainly outlook. I And we're really, little higher baseline look as we the has go will now, than you downside

do [Indiscernible] It some there there. could could on I the on also, is there some retail upside So be that. [Indiscernible] be

tough of the it's [Indiscernible] on pull appliances, But hold pretty think well economy. mentioned, sort that. even do as I I've across in if up really back things to

to softened we things but do So I anything cautious I else. all be the probably that think think that's the just than it we when might think bit, little retail, that happen, across more a just

that whole backed the I their up, that sort crimp If that some of they across biggest comes dollars the retailers, of holiday that little bit. store, back -- their open-to-buy that factor may season. orders have for free probably up think a stays the all is online, will backup in inventory the through

think of is that's that So got hard really, bit. little I the to really us kind a That's one factor predict.

reason, pull So little back I for bit. that think it a

Justin Kleber

That's there, helpful color. just a Greg. follow-up Maybe

plans. be your I or all business. I placed? how an [skittish] to are the the becoming and know successful as I category we across of saying impacting understand what sure Are kind So want broadly across at make what reorder the you're with retail retail, seems there's to it your and within just seeing that your they've you're think speaking, maintaining orders guess conservatism just specifically I is heading guess, more excesses, store? down they about working more it partners you into some already and Or inventory about just holiday

Scott Tidey

got quarter. position of keeping like appliance and want feel going fourth very Yes, seen kitchen ours, good actually not We Justin, really this overstocked inventory that's the bullish small would that haven't some Scott. overstocked. kind others, I into is to that is change, the retailer. on varies are We've be better other an and across they any in bringing across it very cadence a have actually but they are we area general, say departments Where in of in product. most

company So across there's dollars limited. be the overall open-to-buy may the

some And they're they by to really supply, retailers. and certainly some maybe or of mixed. share. it I the get rid weeks work week own they again, down back bullish business -- trying with of we still out own still to or that very there's usual do have try a is grab that how their mean, while of being others that seasonal figure to some goods as so some are But more two, are there's and goods pulled saw that trying their and to

Justin Kleber

quarter. XQ. ask taking progress and to here increase continue think on we assume on color. the a nice about, guess, X in see helpful transportation during decline price standpoint industry That's the margin And of in we're me of the I and here your more the the do mentioned as Greg, pricing? you from How costs will demand input it another Scott, just -- across normalize I maybe What's case I as to stickiness costs, from softens. mentioned, the historically been starting you specifically? business

hold price cost to some of increases? that continue start those gets back rolled do to to or So you on Or pressures these do if think that you decline?

Greg Trepp

-- cost I up. up, the for input are stopped Well, generally, the think commodity have going production some

year but So the of a this costs negotiations container half increases. know. position of The our suppliers. as were costs the side back cost on commodity flat, from from I from you into we went cost where as the this ago, on year container things really were up and the purchase year, think side, was down, coming they relatively all way, And coming are way cost they're is

there's So press that in it's but the a of dropping, lot news from cost a record dropping high.

when what with So think it's we guess will costs they the closely happen -- year And strong, a next as very working sure we're And marketplace. remain those we to on down. very very they're competitive going come up. to is my go into closely retailers and make I work going

And margins we we're get usually range costs, revenue to and so going that's got our profit in and drive how operating trying that's say. what our control historical to keep expansion. always that to We and

we pricing. likely closer as think and not into competitive the this more I to it's just gross that go in rightsize than work the we're with So in retailers that future, stay range margin we'll just

Operator

Instructions] [Operator Okay.

We questions have no registered. further

over remarks. back for you hand now I'll to So closing Greg

Greg Trepp

you. Thank

expand designed margin to balance focused time. our As strong deliver to the well cash initiatives we year, and X flow that on are the operating revenue, strategic executing of look increase we're on over

order the growth and record commercial flow is business continues. Our strong experiencing

growth. long to have We XXXX strong. is drive market products introduced stay new to list projected and of in small a [appliance] The XXXX

We navigate year. to it them to incredibly continue again well-positioned address we our levels. for and we have this the remains joining external thinking, all demonstrate on concludes focused our compared which also robust good team [Indiscernible]. am their continuing grateful to That diligence well throughout you I execute call. hard work, declining just XXXX, Thank While many above We're to we believe presentation. a for through ongoing as are they challenges. to as well pre-pandemic

Operator

you joining. Thank today's call. for concludes This

You may disconnect now your lines.

Hamilton Beach Brands Holding (HBB) 6 Aug 222022 Q2 Earnings call transcript