Hamilton Beach Brands Holding Company Q1 FY2026 earnings call

• Driving growth of core business: Executing on product innovation pipeline, new blender kitchen systems gaining traction, redesigned Durathon iron platform well received, expansion into garment steamers, new single serve coffee platforms launching later, multiple product category placements, increased digital, social media, and influencer marketing. • Accelerating digital transformation: Leveraging e-commerce capabilities and high consumer reviews, increased advertising investment, added resources for discoverability and AI shopping tactics, selected new advertising agency for digital marketing strategy. • Gaining larger share in premium market: Lotus brand expansion exceeding expectations, preparing for fall launch of Lotus Signature, key retail partner expanding shelf space. • Leading in global commercial market: Commercial business gaining traction, Summit Edge blender as cornerstone, deepening relationships with food service and hospitality chains, adding Eclipse blender to leading coffee chain, Sunkist commercial juicers and sectionizers exceeding expectations. • Accelerating growth of Hamilton Beach Health: Third consecutive quarter of profitable growth, on track to increase sales by 50% this year, expanding injectable reach, launching pill management platform pilot in third quarter targeting oncology and mental health treatments.

First quarter revenue was $122 million, down 8.6% year over year. Revenue decline was primarily due to lower volumes in U.S. consumer business, partially offset by higher prices and robust sales growth from healthcare division. Gross profit was $36.2 million, up 10.4%, with gross profit margin at 29.7%, a 510 basis point improvement. This was due to favorable pricing, customer mix, one-time benefit from IEPA tariffs, and timing of price increases. Operating profit was $5 million, more than double the prior year's $2.3 million. Net cash provided by operating activities was $3.3 million, down from $6.6 million in the prior year quarter. Net debt was $2.6 million at end of first quarter, compared to $1.7 million in prior year.

• Reiterating previously issued guidance: Expect revenue growth to approach mid single digit range. • Growth margins still projected to be similar to slightly better than 2025 level, with reinvestment of Q1 margin upside into promotional programs. • Operating profit expected to decline low teens on percentage basis, inclusive of $6 million planned advertising spend and $6 million accelerated depreciation. • Cash flow from operating activities less cash used for investing activities expected to be in $35 to $45 million range. • Current outlook excludes potential impact from IEPA-related refunds totaling ~$41 million, timing and ultimate recovery uncertain.

Q: A question about Lotus. The investment behind them and just how things are going and if we should expect additional investment behind Lotus beyond 2026?

A: Hey, Adam. This is Scott. So, yes. So, as we indicated, we had a great launch with our initial exclusive national chain in the back half of 2025. That exclusivity with that chain ended in the first quarter of 2026. So we are now rolling that out, Lotus Professional, out to other retail customers as we speak. And as mentioned, we're super excited about launching Lotus Signature later in the year. That'll be closer to the holiday time period. And we did support the business with several million dollars last year, and we expect to do so with more this year. And that would continue through into 2027 as well and beyond.

Q: Will there be a time, given the level of investment, what are your kind of long-term expectations for Lotus?

A: I don't think we have a dollar revenue amount that we're going to put out there and project. I think that we believe that we can go in and grab multiple share points in this very large segment of the small kitchen appliances. And we've got what we believe is very targeted retailers to be able to do that. Those are both brick and mortar and online customers that we feel like are more in the premium position. And the revenue will come. Again, we're willing to commit. We know this is building our own brand, so we're willing to commit to the advertising investment behind it to build that brand awareness.