Hamilton Beach Brands Holding Co Q4 FY2024 earnings call

• Q4 performance was highlighted by low single - digit growth and profitability exceeding expectations, with gross margins north of 26% despite a promotionally driven holiday market. - Full year performance: revenue increased mid - single digits due to successful new product launches and new points of distribution; gross margins expanded by 300 basis points; operating profit grew 23%; generated over $65 million in operating cash flow; ended 2024 in a net cash position. - Took decisive action to add growth opportunities, including acquiring HealthBeacon in February 2024 and diversifying manufacturing and sourcing to reduce exposure to China. - Executing against six strategic initiatives: driving core growth, gaining share in the premium market, leading in the global commercial market, accelerating growth of Hamilton Beach Health, accelerating digital transformation, and leveraging partnerships and acquisitions. - New product examples: FlexBrew Coffee maker, Numilk plant - based milk maker, CHI Vibes garment steamer, Clorox air purifier line; commercial business saw Summit Edge blender sales increase over 50%; HealthBeacon acquired in 2024 with plans to expand patient subscription base and conditions treated using the Smart Sharp system through partnership with OptumHealth. - Focused on growing through existing distribution and selectively expanding physical and digital presence, with solid growth in retail, online, and commercial channels.

In the fourth quarter of 2024, total revenue was $213.5 million, a 3.3% increase over the same period in 2023. The increase was driven by favorable product mix and higher volume, partially offset by average price decreases and foreign currency impacts. The North American consumer market, especially the US consumer market, saw solid growth, while there were revenue declines internationally. Additionally, the fourth quarter included $1.7 million of revenue from the HealthBeacon acquisition. For the full year 2024, net revenue increased 4.6% to $654.7 million compared to $625.6 million. Gross margin increased 300 basis points to 26% in 2024, which is a record for Hamilton Beach since it became a stand - alone public company in 2017. Operating profit in 2024 increased 23.1% to $43.2 million compared to $35.1 million in 2023.

• Small kitchen appliance retail market is expected to grow in the low single - digit range in 2025. Hamilton Beach expects to modestly outperform the industry with revenue growth approaching the mid - single - digit range in 2025. - Operating profit is expected to increase at a faster rate than revenue, driven by expense leverage on higher revenue, gross profit margins in line with 2024 record level, and a sharp decrease in HealthBeacon’s SG&A expenses, partially offset by a significant step - up in planned advertising in 2025. - Mitigated 35% of business to tariffs in 2023 and is on track to mitigate another 25% - 35% in 2025, and expects to offset additional tariff impact through select price increases and supplier concessions, not anticipating tariff impact to pressure profitability in 2025. - Cash flow from operating activities less cash flow used for investing activities for 2025 is expected to be in the range of $40 million to $50 million per year.

• Tariff risk: Although steps are being taken to mitigate tariffs, changes in tariff policies could still impact the business. - Market risk: Promotionally driven market environment during holidays with consumers being selective with discretionary spending could affect sales. - Foreign currency risk: Fluctuations in foreign exchange rates could impact financial results.