Hamilton Beach(HBB) - 2021 Q4 - Annual Report

Revenue and Profitability - Revenue for 2021 was $658.4 million, an increase of $54.7 million or 9.1% compared to 2020, driven by higher sales in the North American consumer market and a 22.4% increase in eCommerce revenue[116][117] - Gross profit margin decreased to 20.7% from 23.0% due to significantly higher transportation costs and a prior year benefit of approximately $2.1 million for tariff relief[118] - Operating profit decreased to $31.5 million in 2021, down 15.7% from $37.4 million in 2020, impacted by increased costs and lower gross profit[116] - Selling, general and administrative expenses increased by $4.8 million, primarily due to $2.9 million in relocation expenses for the distribution center and increased employee-related costs[119] Cash Flow and Investments - Net cash provided by operating activities was $17.9 million in 2021, a significant improvement from cash used of $27.9 million in 2020, largely due to better management of working capital[126] - Net cash used for investing activities increased to $11.8 million in 2021, primarily due to capital spending for a new distribution center[127] - Net cash used for financing activities was $7.3 million in 2021, a decrease from cash provided of $34.2 million in 2020, reflecting reduced net borrowing activity on the revolving credit facility[128] Tax and Interest Rates - The effective income tax rate on income from continuing operations was 26.4% for 2021, down from 28.7% in 2020, due to various tax adjustments[121] - Interest expense increased by 42.8% to $2.9 million in 2021, compared to $2.0 million in 2020[116] - The weighted average interest rate applicable to the HBB Facility for the year ended December 31, 2021, was 3.38%, including the floating rate margin and the effect of interest rate swap agreements[133] - A 1/8% increase in the base rate would increase HBB's estimated total annual interest payments on the HBB Facility by approximately $0.1 million[138] Debt and Financial Obligations - Total contractual cash obligations as of December 31, 2021, amounted to $468.4 million, with $299.1 million due in 2022[137] - The obligations under the HBB Facility are secured by substantially all of HBB's assets[130] - HBB expects to continue borrowing against the facility and making voluntary repayments within the next twelve months[130] Currency and Foreign Exchange - HBB's financial results are subject to variability from exchange rate movements, particularly with the Canadian dollar, Mexican peso, Chinese yuan, and Brazilian real[148] - The potential impact of currency fluctuation increases as international expansion increases[148] - HBB uses forward foreign currency exchange contracts to partially reduce risks related to foreign currency transactions, maturing within twelve months[149] - The fair value of the Company's foreign currency exchange contracts was a net receivable of less than $0.1 million at December 31, 2021[150] - Assuming a hypothetical 10% weakening of the U.S. dollar, the fair value of foreign currency-sensitive financial instruments would decrease by $1.6 million[150]