Hamilton Beach(HBB) - 2025 Q1 - Quarterly Report

Part I. FINANCIAL INFORMATION Item 1. Financial Statements The Q1 2025 financial statements show a return to profitability driven by revenue growth and margin expansion Consolidated Balance Sheets Total assets grew to $418.0 million, driven by higher inventory and cash, with a corresponding rise in liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total current assets | $313,448 | $262,291 | | Inventory | $165,890 | $133,523 | | Total assets | $418,020 | $368,950 | | Total current liabilities | $158,838 | $126,194 | | Total liabilities | $254,839 | $223,543 | | Total stockholders' equity | $163,181 | $145,407 | Consolidated Statements of Operations The company achieved a net income of $1.8 million in Q1 2025, reversing a $1.2 million loss from the prior year Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $133,372 | $128,277 | | Gross Profit | $32,771 | $30,054 | | Operating Profit (Loss) | $2,313 | $(943) | | Net Income (Loss) | $1,805 | $(1,162) | | Diluted EPS | $0.13 | $(0.08) | Consolidated Statements of Cash Flows Operating cash flow decreased to $6.6 million due to investments in inventory and changes in trade receivables Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $6,620 | $19,701 | | Net cash provided by (used for) investing activities | $(516) | $(6,749) | | Net cash provided by (used for) financing activities | $(4,958) | $(2,085) | Notes to Unaudited Consolidated Financial Statements Key notes detail a new two-segment reporting structure, the HealthBeacon acquisition, and a supplier finance program - The company's operations are now managed and reported in two segments: (1) Home and Commercial Products and (2) Health[21] - On February 2, 2024, the company acquired HealthBeacon PLC for approximately $7.5 million in cash, now part of the Health segment[55] - The company has a supplier finance program for accounts payable, with $66.9 million in outstanding payment obligations[30] Disaggregated Revenue for Q1 (in thousands) | Type of good or service | 2025 | 2024 | | :--- | :--- | :--- | | Consumer products | $117,335 | $112,750 | | Commercial products | $12,292 | $13,453 | | Licensing | $2,560 | $1,615 | | Leasing | $1,185 | $459 | | Total revenues | $133,372 | $128,277 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes improved Q1 performance to favorable product mix, volume growth, and the HealthBeacon acquisition Q1 2025 vs Q1 2024 Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $133,372 | $128,277 | $5,095 | 4.0% | | Gross profit | $32,771 | $30,054 | $2,717 | 9.0% | | Operating profit (loss) | $2,313 | $(943) | $3,256 | n/m | | Net income (loss) | $1,805 | $(1,162) | $2,967 | n/m | - Revenue growth was driven by favorable product mix and increased volume, with the HealthBeacon acquisition contributing $1.5 million[68] - Gross profit margin increased to 24.6% from 23.4% due to favorable product mix and the higher-margin HealthBeacon business[69] - As of March 31, 2025, the company had $72.6 million in excess availability under its revolving credit facility[79] Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate and foreign currency risks using swaps and forward contracts with limited financial impact - To manage interest rate risk, the company has interest rate swaps with notional values of $50.0 million as of March 31, 2025[81][88] - A hypothetical 10% relative decrease in interest rates would cause a $0.1 million decrease in the fair value of interest rate swap agreements[89] - The company uses forward foreign currency exchange contracts to reduce risks from transactions in Canadian dollars, Mexican pesos, Chinese yuan, and Euros[90][91] - A hypothetical 10% weakening of the U.S. dollar would decrease the fair value of foreign currency-sensitive financial instruments by $2.0 million[92] Controls and Procedures Management concluded that disclosure controls and procedures were effective, excluding the recently acquired HealthBeacon - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[94] - HealthBeacon, acquired in February 2024, has been excluded from the assessment of internal control over financial reporting for this quarter[96] Part II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings not expected to have a material adverse effect - Information regarding legal proceedings is detailed in Note 6, 'Contingencies', of the financial statements[98] - As of March 31, 2025, accrued obligations for environmental matters were $3.4 million[50][52] Risk Factors The company highlights significant risk from U.S. tariffs on Chinese goods, as three-fourths of its suppliers are in China - A key risk is government trade actions, as approximately three-fourths of the company's suppliers are based in China, making many products subject to Section 301 tariffs[100] - Mitigation strategies include reviewing sourcing options outside of China, filing for tariff exclusions, and working with suppliers and customers[100] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 180,556 shares for $3.4 million in Q1 2025, with $8.8 million remaining in its buyback program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Maximum Value Remaining for Purchase | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 31,732 | $16.51 | 31,732 | $10,924,841 | | Feb 2025 | 39,121 | $17.61 (1) | 0 | $10,924,841 | | Mar 2025 | 109,703 | $19.69 | 109,703 | $8,764,857 | | Total | 180,556 | $18.98 | 141,435 | $8,764,857 | - (1) February repurchases represent shares withheld for tax payments due upon issuance of stock to employees and were not part of the publicly announced program[101] - The stock repurchase program authorizes up to $25 million in purchases through December 31, 2025[37][101] Other Items (3, 4, 5, 6) The company reports no senior security defaults, mine safety issues, or new director/officer 10b5-1 trading plans - Item 3: No defaults upon senior securities were reported[105] - Item 4: No mine safety disclosures were made[106] - Item 5: No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement[107]