Hamilton Beach(US:HBB)2023-03-09 21:26Revenue Performance - Revenue for 2022 was $640.9 million, a decrease of $17.4 million or 2.6% compared to 2021, primarily due to lower unit volume in the US, Canadian, and Latin American markets[115]. - The Global Commercial market saw a revenue increase of $20.5 million, or 50.0%, compared to the prior year, driven by a rebound in customer demand[115]. - The company transitioned to a licensing model for its consumer business in Brazil and China, impacting revenue negatively[115]. Profitability and Expenses - Gross profit margin decreased to 20.1% in 2022 from 20.7% in 2021, with price increases partially offsetting higher product and transportation costs[116]. - Selling, general and administrative expenses decreased by $14.6 million, largely due to a $10.0 million insurance recovery recognized in Q1 2022[117]. - Operating profit increased by $7.3 million to $38.8 million, representing a 23.0% increase compared to the previous year[115]. Cash Flow and Financing Activities - Net cash used for operating activities was $3.4 million in 2022, compared to $17.9 million provided in 2021, largely due to a significant increase in net working capital usage[124]. - Net cash provided by financing activities was $5.6 million in 2022, a turnaround from cash used of $7.3 million in 2021, attributed to increased net borrowing activity[125]. Interest and Taxation - Interest expense increased by $1.7 million, primarily due to rising interest rates and increased average borrowings under the revolving credit facility[118]. - The effective income tax rate on continuing operations improved to 22.1% in 2022 from 26.4% in 2021, influenced by the reversal of interest and penalties on unrecognized tax benefits[120]. Debt and Credit Facilities - HBB has a $150.0 million senior secured floating-rate revolving credit facility, with borrowings outstanding of $110.9 million as of December 31, 2022[126][127]. - The excess availability under the HBB Facility was $38.3 million at the end of 2022[127]. - The weighted average interest rate applicable to the HBB Facility for the year ended December 31, 2022, was 3.49%[128]. - HBB has entered into interest rate swap agreements with notional values totaling $100.0 million, with average fixed interest rates of 0.9% and 1.6%[129]. Financial Obligations and Sensitivities - Total contractual cash obligations amount to $361.9 million, with $186.5 million due in 2023[133]. - HBB's variable interest payments on the HBB Facility are estimated at $11.3 million, with $5.6 million due in 2023[133]. - The fair value of HBB's interest rate swap agreements was a receivable of $5.4 million at December 31, 2022[142]. - A hypothetical 10% increase in interest rates would increase the fair value of interest rate swap agreements by $0.3 million[142]. - The fair value of HBB's foreign currency exchange contracts was a net receivable of $0.1 million at December 31, 2022[145]. - Assuming a hypothetical 10% weakening of the U.S. dollar, the fair value of foreign currency-sensitive financial instruments would decrease by $1.2 million[145].