Hamilton Beach Brands Holding Co
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
HBB$32.16-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001709164-24-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001709164-24-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 45 previous paragraphs and 47 current paragraphs.
22 unchanged; 23 reworded; 2 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Pension termination expense - During the third quarter of 2024, a one-time non-cash expense of $7.6 million was incurred in connection with the termination of the Company’s U.S. defined benefit pension plan related to the reclassification of historical unrecognized losses from Accumulated Other Comprehensive Income.
Current report
Pension termination expense - During the third quarter of 2024, a one-time non-cash expense of $7.6 million was incurred in connection with the termination of the Company’s U.S. defined benefit pension plan related to the reclassification of historical unrecognized losses from Accumulated Other Comprehensive Income.
Reworded paragraphs (23)
Previous wording
Second Quarter of 2024 Compared with Second Quarter of 2023
Current wording
Third Quarter of 2024 Compared with Third Quarter of 2023
Previous wording
Revenue - Revenue increased $19.1 million or 14.0% increase compared to the prior year due to increased unit volume and a more favorable product mix primarily driven by increased revenue in the US Consumer market. Additionally, sales increased in the Latin American and Mexican Consumer and Global Commercial markets, while sales decreased in the Canadian Consumer market.
Current wording
Revenue - Revenue increased $3.1 million compared to the prior year due to a more favorable product mix and increased unit volume primarily driven by increased revenue in the US Consumer and Mexican Consumer markets. Additionally, the acquisition of HealthBeacon added a new revenue stream during the year and contributed $1.2 million in revenue for the three months ended September 30, 2024. These increases were partially offset by decreased revenue in the Latin American, Canadian Consumer, and Global Commercial markets.
Previous wording
Gross profit - As a percentage of revenue, gross profit margin increased to 25.9% compared to 20.0% in the prior year primarily due to lower product costs and a favorable product mix.
Current wording
Gross profit - As a percentage of revenue, gross profit margin increased to 28.0% compared to 26.1% in the prior year primarily due to a favorable product mix and lower product costs.
Previous wording
Selling, general and administrative expenses -Selling, general and administrative expenses increased by $3.8 million compared to the second quarter of 2023. The increase was primarily due to the addition of HealthBeacon’s selling, general and administrative expenses as well as overall increases in employee-related costs and advertising expenses.
Current wording
Selling, general and administrative expenses (SG&A) -Selling, general and administrative expenses increased by $7.7 million compared to the third quarter of 2023. The increase was primarily driven by higher employee-related costs, including $2.9 million of increased non-cash equity incentive compensation due to stock price appreciation, the addition of $1.8 million of HealthBeacon SG&A expenses, and the absence of a $0.9 million non-recurring insurance recovery in the prior year.
Previous wording
Interest expense, net- Interest expense, net decreased $0.7 million due to decreased average borrowings outstanding under the HBB Facility and lower interest rates compared to the second quarter of 2023.
Current wording
Interest expense, net- Interest expense, net decreased $0.5 million due to decreased average borrowings outstanding under the HBB Facility and lower interest rates compared to the third quarter of 2023.
Previous wording
Other expense (income), net- Other expense (income), net includes currency losses of $0.6 million in the current year compared to currency gains of $0.4 million in the prior year.
Current wording
Other expense (income), net- Other expense (income), net includes currency losses of $0.2 million in the current year compared to currency losses of $0.4 million in the prior year.
Previous wording
Income tax expense (benefit) - The effective tax rate on income was 33.2% and 50.9% for three months ended June 30, 2024 and 2023, respectively. The effective tax rate was lower in the three months ended June 30, 2024 due to a decrease in unfavorable discrete items, partially offset by a valuation allowance on foreign losses.
Current wording
Income tax expense (benefit) - The effective tax rate was 27.4% and 21.6% for three months ended September 30, 2024 and 2023, respectively. The effective tax rate was higher in the three months ended September 30, 2024 due to a valuation allowance on foreign losses in the current year and a tax benefit on foreign income in the prior year that did not recur.
Previous wording
First Six Months of 2024 Compared with First Six Months of 2023
Current wording
First Nine Months of 2024 Compared with First Nine Months of 2023
Previous wording
Revenue - Revenue increased by $19.2 million compared to the prior year due to increased unit volume and a more favorable product mix primarily driven by increased revenue in the US Consumer market. Additionally, sales increased in the Latin American and Mexican Consumer and Global Commercial markets, while sales decreased in the Canadian Consumer market.
Current wording
Revenue - Revenue increased by $22.2 million compared to the prior year due to increased unit volume and a more favorable product mix primarily driven by increased revenue in the US Consumer, Mexico Consumer, and Latin American markets. Additionally, the acquisition of HealthBeacon added a new revenue stream during the year and contributed $2.6 million in revenue for the nine months ended September 30, 2024. These increases were partially offset by decreased revenue in the Canadian Consumer market and Global Commercial market.
Previous wording
Gross profit -Gross profit margin increased to 24.8% from 18.2% primarily due to lower product costs and a favorable product mix.
Current wording
Gross profit -Gross profit margin increased to 25.9% from 21.1% primarily due to lower product costs and a favorable product mix.
Previous wording
Selling, general and administrative expenses -Selling, general and administrative expenses increased $8.8 million compared to 2023. The increase was primarily due to the addition of HealthBeacon’s selling, general and administrative expenses along with $1.1 million of transaction costs, an increase in employee-related costs including non-cash stock incentive compensation due to stock price appreciation, and increased advertising expenses.
Current wording
Selling, general and administrative expenses (SG&A) -Selling, general and administrative expenses increased $16.4 million compared to 2023. The increase is primarily due to the addition of $5.6 million of HealthBeacon SG&A expenses, higher employee-related costs, including $4.2 million of increased non-cash equity incentive compensation due to stock price appreciation, an increase in outside services and non-recurring items, which include $1.3 million of HealthBeacon transaction costs and the absence of a $0.9 million insurance recovery that occurred in the prior year.
Previous wording
Interest expense, net- Interest expense, net decreased $1.8 million due to decreased average borrowings outstanding under the HBB Facility, and lower interest rates compared to 2023.
Current wording
Interest expense, net- Interest expense, net decreased $2.3 million due to decreased average borrowings outstanding under the HBB Facility, and lower interest rates compared to 2023.
Previous wording
Other expense (income), net- Other expense (income), net includes currency losses of $0.7 million in the current year compared to currency gains of $0.5 million in the prior year.
Current wording
Other expense (income), net- Other expense (income), net includes currency losses of $0.8 million in the current year compared to currency gains of $0.1 million in the prior year.
Previous wording
Income tax expense (benefit) -The effective tax rate was 37.2% compared to 23.7% in the prior year. The effective tax rate was higher for the six months ended June 30, 2024 due to a valuation allowance on foreign losses subject to a foreign statutory rate lower than the US tax rate.
Current wording
Income tax expense (benefit) -The effective tax rate was 34.7% compared to 19.7% in the prior year. The effective tax rate was higher for the nine months ended September 30, 2024 due to a valuation allowance on foreign losses in the current year and tax benefits on foreign income and credits in the prior year that did not recur.
Previous wording
Our cash flows are provided by dividends paid or distributions made by HBB. The only material assets held by us are the investments in our consolidated subsidiary. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by our subsidiary. We have not guaranteed any of the obligations of HBB.
Current wording
Our cash flows are provided by dividends paid or distributions made by HBB. The only material assets held by us are the investment in our consolidated subsidiary. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by our subsidiary. We have not guaranteed any of the obligations of HBB.
Previous wording
Our principal sources of cash to fund liquidity needs are: (1) cash generated from operations and (2) borrowings available under the HBB Facility. Our primary use of funds consists of working capital requirements, operating expenses, payment of dividends, repurchase of shares, capital expenditures and payments of principal and interest on debt.
Current wording
Our principal sources of cash to fund liquidity needs are: (1) cash generated from operations and (2) borrowings available under the HBB Facility. Our primary use of funds consists of working capital requirements, operating expenses, payment of dividends, repurchase of shares, capital expenditures, payments of principal and interest on debt and acquisitions.
Previous wording
The HBB Facility expires on June 30, 2025, within one year after the issuance of these financial statements. Given the market conditions including unfavorable pricing terms, we have not yet completed our refinancing of the HBB Facility and accordingly, all amounts outstanding have been classified as current liabilities. Based on the current status of the refinancing and our history of successfully refinancing our debt, we believe that it is probable that the HBB Facility will be refinanced before its maturity. We believe funds available from cash on hand, the HBB Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months.
Current wording
The HBB Facility expires on June 30, 2025, within one year after the issuance of these financial statements. We have not yet completed our refinancing of the HBB Facility and, accordingly, all amounts outstanding have been classified as current liabilities. Based on the status of the refinancing and our history of successfully refinancing our debt, we believe that it is probable that the HBB Facility will be refinanced before its maturity. We believe funds available from cash on hand, the HBB Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months.
Previous wording
Operating activities - Net cash provided by operating activities was $37.1 million compared to $57.3 million in the prior year. Net working capital provided cash of $38.8 million in 2024 compared to cash provided of $69.0 million in 2023. The 2024 and 2023 periods benefited from a continued focus on collections initiatives that led to improvements in days sales outstanding (DSO). The 2023 period benefited from significant excess inventory reduction activities.
Current wording
Operating activities - Net cash provided by operating activities was $35.2 million, representing more normalized post-pandemic working capital, compared to $68.7 million in the prior year, which benefited from significant excess inventory reduction activities. Net working capital provided cash of $20.3 million in 2024 compared to cash provided of $64.3 million in 2023. The 2024 period benefited from the Company's continued focus on working capital management which led to improvements in days sales outstanding and days payable outstanding. The change in net cash provided by operating activities reflects the net working capital changes partially offset by adjustments to net income for the non-cash stock compensation and pension termination expenses.
Previous wording
Investing activities - Net cash used for investing activities in 2024 increased compared to 2023 related primarily to the acquisition of HealthBeacon offset by the extinguishment of our secured loan to HealthBeacon in the first quarter of 2024 which provided net cash of $1.6 million.
Current wording
Investing activities - Net cash used for investing activities in 2024 increased compared to 2023 related primarily to the acquisition of HealthBeacon offset by the extinguishment of our secured loan to HealthBeacon in the first quarter of 2024 which provided net cash of $1.6 million. Additionally, the Company used excess cash on hand to invest in a six-month U.S. Treasury bill during the third quarter of 2024.
Previous wording
Financing activities - Net cash used for financing activities was $7.7 million in 2024 compared to net cash used for financing activities of $54.6 million in 2023. The change is due to a decrease in HBB’s net borrowing activity on the HBB Facility.
Current wording
Financing activities - Net cash used for financing activities was $14.6 million in 2024 compared to net cash used for financing activities of $65.7 million in 2023. The change is due to a decrease in HBB’s net borrowing activity on the HBB Facility. This decrease was partially offset by increased purchases of treasury stock.
Previous wording
The HBB Facility expires on June 30, 2025. The entire outstanding balance has been classified as a current liability due to the fact the facility expires within one year and has not yet been refinanced. The Company does not expect to make voluntary repayments under the HBB Facility within the next twelve months as the rate of return to invest excess cash exceeds the average interest rate of the HBB Facility. A material decrease in interest rates could cause us to re-evaluate.
Current wording
The HBB Facility expires on June 30, 2025. The entire outstanding balance has been classified as a current liability due to the fact the facility expires within one year and has not yet been refinanced. The Company does not expect to make voluntary repayments under the HBB Facility as the rate of return to invest excess cash exceeds the average interest rate of the HBB Facility. A material decrease in interest rates could cause us to re-evaluate.
Previous wording
The obligations under the HBB Facility are secured by substantially all of HBB’s assets. As of June 30, 2024, the borrowing base under the HBB Facility was $124.2 million and borrowings outstanding were $50.0 million. As of June 30, 2024, the excess availability under the HBB Facility was $74.2 million.
Current wording
The obligations under the HBB Facility are secured by substantially all of HBB’s assets. As of September 30, 2024, the borrowing base under the HBB Facility was $148.5 million and borrowings outstanding were $50.0 million. As of September 30, 2024, the excess availability under the HBB Facility was $98.5 million.
Previous wording
The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility. Borrowings bear interest at a floating rate, which can be a base rate, SOFR or bankers’ acceptance rate, as defined in the HBB Facility, plus an applicable margin. The applicable margins, effective June 30, 2024, for base rate loans and SOFR loans denominated in U.S. dollars were 0.0% and 1.55%, respectively. The applicable margins, effective June 30, 2024, for base rate loans and bankers’ acceptance loans denominated in Canadian dollars were 0.0% and 1.55%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused commitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability. The weighted average interest rate applicable to the HBB Facility for the six months ended June 30, 2024 was 3.17% including the floating rate margin and the effect of the interest rate swap agreements described below.
Current wording
The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility. Borrowings bear interest at a floating rate, which can be a base rate, SOFR or bankers’ acceptance rate, as defined in the HBB Facility, plus an applicable margin. The applicable margins, effective September 30, 2024, for base rate loans and SOFR loans denominated in U.S. dollars were 0.0% and 1.55%, respectively. The applicable margins, effective September 30, 2024, for base rate loans and bankers’ acceptance loans denominated in Canadian dollars were 0.0% and 1.55%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused commitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability. The weighted average interest rate applicable to the HBB Facility for the nine months ended September 30, 2024 was 3.18% including the floating rate margin and the effect of the interest rate swap agreements described below.