Hamilton Beach Brands Holding Company Q2 FY2025 earnings call

• Faced challenges due to U.S. tariffs on Chinese imports in Q2 2025, causing retailer demand decrease. - Strategically reduced trade advertising and promotional activities during the quarter. - Accelerated manufacturing diversification away from China, implemented foreign trade zone operations and inventory prebuilds. - Took pricing actions in late June to align with tariff increases. - Enacted cost management measures including an 8% reduction in force, realizing $10 million in annualized savings. - Core business maintained unit leadership in North America despite top line headwinds. - Lotus brand launch started, with broader distribution in Q4 2025 and Signature line in mid-2026, supported by over $5 million in marketing. - Commercial business saw early wins from the Sunkist agreement accelerating faster than expected. - Health business expanding customer base and working towards a 50% increase in patient subscription base.

Total sales declined 18% in Q2 2025. Core business maintained its #1 position in units in North America. Premium business performed well with the Lotus brand launch starting last week. Commercial business contributed to gross margin expansion, with Sunkist expected to be about 5% of the commercial business in 2025 and double in 2026. The Health business had $1.7 million in top line revenue in the second quarter of 2025 with an operating segment loss of $864,000, showing year-over-year improvement in revenue and a reduction in the loss.

Management refrains from reinstating guidance at this time due to uncertainty regarding ongoing trade negotiations between the U.S. and its trade partners, as well as the impact of macro and geopolitical events on retailer planning and consumer demand.

• Uncertainty in trade tariff negotiations between the U.S. and other countries. - Impact of macro and geopolitical events on retailer planning and consumer demand.

Q: Can you share the sales of the Health business in the second quarter?

A: The Health business had $1.7 million in top line revenue and an operating segment loss of $864,000 in the 3 months ended June 30, 2025.

Q: How is the capital allocation plan for stock buybacks governed?

A: We first buy back shares to cover anti-dilutive compensation, then are opportunistic based on liquidity and undervaluation.

Q: Any details on the cost savings program and price increases?

A: $10 million annualized savings mostly from the retail segment; price increases taken in late June to align with tariffs, with retailers understanding due to sourcing from Asia Pacific countries.

Q: Thoughts on the company's growth going forward?

A: Focus on premium space, commercial business global opportunities, and Health business subscription growth; expect to continue growing despite current challenges.