HAMILTON BEACH BRANDS HOLDING COMPANY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS
GLEN ALLEN, Va.,
Highlights of 2023 Periods Compared to 2022 Periods
|
THREE MONTHS |
TWELVE MONTHS |
||
|
2023 |
2022 |
2023 |
2022 |
|
(In millions) |
|
|
|
Revenue |
$ 206.7 |
$ 196.2 |
$ 625.6 |
$ 640.9 |
Gross profit |
$ 55.3 |
$ 34.1 |
$ 143.7 |
$ 129.1 |
% of revenue |
26.8 % |
17.4 % |
23.0 % |
20.1 % |
Operating profit |
$ 25.0 |
$ 11.3 |
$ 35.1 |
$ 38.8 |
% of revenue |
12.1 % |
5.7 % |
5.6 % |
6.1 % |
|
||||
Cash flow from operating activities |
$ 88.6 |
$ (3.4) |
||
Total debt |
$ 50.0 |
$ 110.9 |
||
Net debt |
$ 34.6 |
$ 110.0 |
- Revenue in Q4 2023 grew 5.3% compared to Q4 2022, reflecting increased sales in the Company's consumer markets overall partially offset by decreased sales in the Company's global commercial market
- For the full year 2023, gross profit margin expanded by 290 basis points to 23.0%, reflecting lower product costs and favorable product mix
- Operating profit in Q4 2023 was
$25.0 million compared to$11.3 million in Q4 2022, reflecting gross margin expansion - Cash flow from operating activities for the full year 2023 was
$88.6 million compared to a use of$3.4 million for the full year 2022, reflecting the Company's focus on improving net working capital - For the full year 2024, the Company expects total revenue to increase modestly and operating profit to increase moderately
Results of the Fourth Quarter 2023 Compared to the Fourth Quarter 2022
Total revenue grew $10.4 million, or 5.3%, to
In the Global Commercial market, revenue decreased compared to the fourth quarter of 2022, when revenue grew 57.1% due to a continued strong rebound in demand from the food service and hospitality industries from pandemic-driven demand softness. The year-over-year decline was attributable to lower sales in the international food service industry as several markets were overstocked as well as unrest in certain key countries that resulted in an unfavorable impact on sales.
Gross profit was
Selling, general and administrative expenses increased to
Operating profit was
Interest expense, net decreased to
Net income was
Results of the Full Year 2023 Compared to the Full Year 2022
Total revenue of
Gross profit was
Selling, general and administrative expenses were
Operating profit was
Interest expense, net decreased by
The effective tax rate on income was 20.4% and 22.1% for the twelve months ended
Net income was
Cash Flow and Debt
For the year ended
The Company allocated its strong cash flow primarily to reduce debt and return value to shareholders through the quarterly dividend and repurchase of stock. On
For the full year 2023, the Company paid
Outlook
In 2024, the retail marketplace for small kitchen appliances is expected to be modestly below 2023. The Company expects that continued progress with its strategic initiatives will enable it to deliver above market revenue performance. For the full year 2024, the Company expects total revenue to increase modestly compared to full year 2023. Revenue in both the first half and second half of 2024 is expected to increase modestly with the first half expected to be somewhat stronger than the second half mostly due to comparisons to the prior year. Operating profit for the full year 2024 is expected to increase moderately compared to 2023 based on an expansion of gross profit margin.
Continued progress with the Company's six strategic initiatives is expected to drive revenue growth, expand margins, and generate strong cash flow over time. The initiatives are focused on increasing sales of innovative, higher priced, higher margin products in the Company's core North American market. The following is a summary of each initiative.
Drive Core Growth: This initiative is focused on driving the growth of the Company's flagship brands
Gain Share in the Premium Market: The Company continues to develop, license and acquire brands to increase its participation in the premium market. New products and digital marketing support underpin the strategy to grow this business. Premium products include the Company's owned brands Hamilton Beach Professional® and Weston®, and the licensed brands Wolf Gourmet® countertop appliances, CHI® premium garment care products, CloroxTM True HEPA air purifiers, and
Accelerate Growth of
Lead in the Global Commercial Market: This initiative is focused on securing new business and increasing sales with existing customers that operate in the food service and hospitality industries throughout the world. The Hamilton Beach® brand, with its reputation for performance, reliability and differentiated products, is driving growth of commercial products. Continuing to develop products that create a competitive advantage in the Company's core blending and mixing categories, as well as expanding into new categories organically, is the cornerstone of the strategy. Commercial customers include restaurants, fast food chains, bars and hotels. The Company's products are sold through distributors and increasingly through internal sales capabilities. The Company's commercial products are sold in more than 100 countries and more than 50% of revenue is from outside the
Accelerate Digital Transformation: The Company has a well-developed ecommerce capability and continues its investments to gain share in ecommerce markets for consumer and commercial products. The Company collaborates closely with omnichannel and online-only retail customers to leverage the fast-paced changes in the ecommerce channel and increase awareness and sell-through of its products. The Company focuses on robust digital marketing that includes online product content, search optimization and advertising, attracting favorable reviews and strong star ratings, and social media strategies. The Company's
Leverage Partnerships and Acquisitions: This initiative is focused on identifying and securing businesses with a strategic fit to the Company's portfolio. The Company is actively engaged in the pursuit of additional trademark licensing agreements, strategic alliances, and acquisitions to drive growth in all its markets, including accelerating the growth of
Conference Call
The Company will conduct an earnings conference call and webcast on
About
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 Exchange Act. 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) uncertain or unfavorable global economic conditions and impacts from global military conflicts; (2) the Company's ability to source and ship products to meet anticipated demand; (3) the Company's ability to successfully manage constraints throughout the global transportation supply chain; (4) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialty housewares appliances; (5) changes in consumer retail and credit markets, including the increasing volume of transactions made through third-party internet sellers; (6) bankruptcy of or loss of major retail customers or suppliers; (7) changes in costs, including transportation costs, of sourced products; (8) delays in delivery of sourced products; (9) changes in or unavailability of quality or cost effective suppliers; (10) exchange rate fluctuations, changes in the import tariffs and monetary policies and other changes in the regulatory climate in the countries in which the Company operates or buys and/or sells products; (11) the impact of tariffs on customer purchasing patterns; (12) product liability, regulatory actions or other litigation, warranty claims or returns of products; (13) customer acceptance of, changes in costs of or delays in the development of new products; (14) increased competition, including consolidation within the industry; (15) changes in customers' inventory management strategies; (16) shifts in consumer shopping patterns, gasoline prices, weather conditions, the level of consumer confidence and disposable income as a result of economic conditions, unemployment rates or other events or conditions that may adversely affect the level of customer purchases of the Company's products; (17) changes mandated by federal, state and other regulation, including tax, health, safety or environmental legislation; (18) the Company's ability to identify, acquire or develop, and successfully integrate, new businesses or new product lines; and (19) other risk factors, including those described in the Company's filings with the
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THREE MONTHS ENDED |
|
YEAR ENDED |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(In thousands, except per |
|
(In thousands, except per |
||||
Revenue |
$ 206,650 |
|
$ 196,248 |
|
$ 625,625 |
|
$ 640,949 |
Cost of sales |
151,366 |
|
162,186 |
|
481,949 |
|
511,835 |
Gross profit |
55,284 |
|
34,062 |
|
143,676 |
|
129,114 |
Selling, general and administrative expenses |
30,245 |
|
22,759 |
|
108,395 |
|
90,120 |
Amortization of intangible assets |
50 |
|
50 |
|
200 |
|
200 |
Operating profit (loss) |
24,989 |
|
11,253 |
|
35,081 |
|
38,794 |
Interest expense, net |
366 |
|
1,700 |
|
3,000 |
|
4,589 |
Other expense (income), net |
(5) |
|
130 |
|
385 |
|
1,776 |
Income (loss) before income taxes |
24,628 |
|
9,423 |
|
31,696 |
|
32,429 |
Income tax expense (benefit) |
5,059 |
|
2,325 |
|
6,454 |
|
7,162 |
Net income (loss) |
$ 19,569 |
|
$ 7,098 |
|
$ 25,242 |
|
$ 25,267 |
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
Basic earnings (loss) per share |
$ 1.40 |
|
$ 0.51 |
|
$ 1.80 |
|
$ 1.81 |
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
$ 1.40 |
|
$ 0.51 |
|
$ 1.80 |
|
$ 1.81 |
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
13,966 |
|
13,882 |
|
14,036 |
|
13,970 |
Diluted weighted average shares outstanding |
13,985 |
|
13,904 |
|
14,060 |
|
13,996 |
|
|||
|
|||
|
|
|
|
|
(In thousands) |
||
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ 15,370 |
|
$ 928 |
Trade receivables, net |
135,434 |
|
115,135 |
Inventory |
126,554 |
|
156,038 |
Prepaid expenses and other current assets |
9,457 |
|
12,643 |
Total current assets |
286,815 |
|
284,744 |
Property, plant and equipment, net |
27,401 |
|
27,830 |
Right-of-use lease assets |
39,423 |
|
44,000 |
|
6,253 |
|
6,253 |
Other intangible assets, net |
1,292 |
|
1,492 |
Deferred tax assets |
2,581 |
|
3,117 |
Deferred costs |
14,613 |
|
14,348 |
Other non-current assets |
6,324 |
|
7,166 |
Total assets |
$ 384,702 |
|
$ 388,950 |
Liabilities and stockholders' equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ 99,704 |
|
$ 61,759 |
Accrued compensation |
14,948 |
|
11,310 |
Accrued product returns |
6,232 |
|
6,474 |
Lease liabilities |
6,155 |
|
5,875 |
Other current liabilities |
12,549 |
|
16,150 |
Total current liabilities |
139,588 |
|
101,568 |
Revolving credit agreements |
50,000 |
|
110,895 |
Lease liabilities, non-current |
41,937 |
|
46,801 |
Other long-term liabilities |
5,910 |
|
5,152 |
Total liabilities |
237,435 |
|
264,416 |
Stockholders' equity |
|
|
|
Preferred stock, par value |
— |
|
— |
Class A Common stock, par value |
112 |
|
107 |
Class |
36 |
|
38 |
Capital in excess of par value |
70,401 |
|
65,008 |
|
(12,013) |
|
(8,939) |
Retained earnings |
99,398 |
|
80,238 |
Accumulated other comprehensive loss |
(10,667) |
|
(11,918) |
Total stockholders' equity |
147,267 |
|
124,534 |
Total liabilities and stockholders' equity |
$ 384,702 |
|
$ 388,950 |
|
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|
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|
YEAR ENDED |
||||
|
2023 |
|
2022 |
|
2021 |
|
(In thousands) |
||||
Operating activities |
|
|
|
|
|
Net income (loss) |
$ 25,242 |
|
$ 25,267 |
|
$ 21,306 |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating |
|
|
|
|
|
Depreciation and amortization |
4,362 |
|
4,883 |
|
4,913 |
Deferred income taxes |
(906) |
|
372 |
|
2,110 |
Stock compensation expense |
5,394 |
|
3,424 |
|
3,237 |
|
— |
|
2,085 |
|
— |
Other |
(358) |
|
(129) |
|
1,025 |
Net changes in operating assets and liabilities: |
|
|
|
|
|
Affiliate payable |
— |
|
— |
|
(505) |
Trade receivables |
(18,768) |
|
4,532 |
|
27,631 |
Inventory |
30,761 |
|
26,399 |
|
(9,077) |
Other assets |
10,856 |
|
6,274 |
|
(4,729) |
Accounts payable |
37,493 |
|
(69,911) |
|
(20,037) |
Other liabilities |
(5,440) |
|
(6,614) |
|
(8,017) |
Net cash provided by (used for) operating activities |
88,636 |
|
(3,418) |
|
17,857 |
Investing activities |
|
|
|
|
|
Expenditures for property, plant and equipment |
(3,419) |
|
(2,279) |
|
(11,844) |
Issuance of secured loan |
(1,605) |
|
— |
|
— |
Other |
(150) |
|
— |
|
— |
Net cash provided by (used for) investing activities |
(5,174) |
|
(2,279) |
|
(11,844) |
Financing activities |
|
|
|
|
|
Net additions (reductions) to revolving credit agreements |
(60,916) |
|
14,383 |
|
(1,550) |
Purchase of treasury stock |
(3,074) |
|
(2,979) |
|
— |
Cash dividends paid |
(6,082) |
|
(5,782) |
|
(5,468) |
Financing fees paid |
— |
|
(47) |
|
(114) |
Other financing |
— |
|
— |
|
(134) |
Net cash provided by (used for) financing activities |
(70,072) |
|
5,575 |
|
(7,266) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
1,084 |
|
(123) |
|
(33) |
Cash, cash equivalents and restricted cash |
|
|
|
|
|
Increase (decrease) for the year |
14,474 |
|
(245) |
|
(1,286) |
Balance at the beginning of the year |
1,905 |
|
2,150 |
|
3,436 |
Balance at the end of the year |
$ 16,379 |
|
$ 1,905 |
|
$ 2,150 |
Reconciliation of cash, cash equivalents and restricted cash |
|
|
|
|
|
Continuing operations: |
|
|
|
|
|
Cash and cash equivalents |
$ 15,370 |
|
$ 928 |
|
$ 1,125 |
Restricted cash included in prepaid expenses and other current assets |
72 |
|
62 |
|
48 |
Restricted cash included in other non-current assets |
937 |
|
915 |
|
977 |
Total cash, cash equivalents and restricted cash |
$ 16,379 |
|
$ 1,905 |
|
$ 2,150 |
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