Hamilton Beach Brands Holding Co

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading “Forward-Looking Statements.” Accordingly, this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading “Forward-Looking Statements.” Accordingly, this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Second Quarter of 2026 Compared with Second Quarter of 2025

Current wording

Third Quarter of 2026 Compared with Third Quarter of 2025

Previous wording

Selling, general and administrative expenses (SG&A) - Selling, general and administrative expenses increased $5.1 million compared to the prior year. The increase was primarily due to higher incentive related personnel costs, as the prior year reflected lower expected performance. The current period also includes $1.4 million accelerated depreciation of the Company’s legacy enterprise resource planning (ERP) system.

Current wording

Selling, general and administrative expenses (SG&A) - Selling, general and administrative expenses increased $9.0 million compared to the prior year. The increase was driven by $4.0 million in higher incentive related personnel costs primarily due to the appreciation in share price. The current period also includes increased advertising of $1.6 million and $1.3 million in accelerated depreciation of the Company’s legacy enterprise resource planning (ERP) system.

Previous wording

Interest (income) expense, net - Interest income, net was $1.3 million for the three months ended June 30, 2026, compared to interest expense, net of $0.1 million in the prior period due to interest income on IEEPA Tariff Refunds.

Current wording

Other (income) expense, net - Other income, net was $0.2 million for the three months ended September 30, 2026, compared to other expense, net of $0.6 million in the prior period.

Previous wording

Income tax expense (benefit) - The effective tax rate was 24.5% and 25.9% for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was lower for the three months ended June 30, 2026 due to changes in the jurisdictional mix of earnings and a reduction in foreign losses subject to a valuation allowance.

Current wording

Income tax expense (benefit) - The effective tax rate was 31.6% and 18.4% for the three months ended September 30, 2026 and 2025, respectively. The lower effective tax rate in the prior period was primarily due to a favorable discrete tax benefit recognized in the third quarter of 2025.

Previous wording

First Six Months of 2026 Compared with First Six Months of 2025

Current wording

First Nine Months of 2026 Compared with First Nine Months of 2025

Previous wording

Revenue - Revenue increased $3.5 million, or 1.3%, compared to the prior year as pricing offset volume and mix pressure in the U.S. Consumer business, while growth in the Commercial and Health businesses and favorable foreign currency translation drove the overall increase.

Current wording

Revenue - Revenue increased $10.9 million, or 2.8%, compared to the prior year driven by growth in the U.S. Consumer business, while strong double-digit growth in the Health business and favorable foreign currency translation also contributed to the overall increase.

Previous wording

Gross profit - Gross profit margin increased to 43.0% compared to 26.0% in the prior year. The significant improvement in gross margin included one-time benefits related to the IEEPA Tariff Ruling. These benefits consist of IEEPA Tariff Refunds of $36.5 million received in the second quarter, as well as continued sell-through of inventory no longer subject to IEEPA tariffs. These benefits are non-recurring and will not persist beyond the sell-through of the affected inventory. Excluding these benefits, gross profit margin would have been 26.9%.

Current wording

Gross profit - Gross profit margin increased to 37.6% compared to 24.4% in the prior year. The significant improvement in gross margin included one-time benefits related to the IEEPA Tariff Ruling. These benefits consist of IEEPA Tariff Refunds of $36.5 million received in the second quarter, as well as continued sell-through of inventory no longer subject to IEEPA tariffs. These benefits are non-recurring and will not persist beyond the sell-through of the affected inventory. Excluding these benefits, gross profit margin would have been 26.9%.

Previous wording

Selling, general and administrative expenses (SG&A) - Selling, general and administrative expenses increased $5.9 million compared to the prior year. The increase was primarily due to higher incentive related personnel costs, as the prior year reflected lower expected performance. The current period also includes $2.8 million accelerated depreciation of the Company’s legacy ERP system.

Current wording

Selling, general and administrative expenses (SG&A) - Selling, general and administrative expenses increased $14.9 million compared to the prior year. The increase was driven by $6.8 million in higher incentive related personnel costs primarily due to the appreciation in share price. The current period also includes increased advertising of $2.8 million and $4.2 million in accelerated depreciation of the Company’s legacy enterprise resource planning (ERP) system.

Previous wording

Interest (income) expense, net - Interest income, net was $1.3 million for the six months ended June 30, 2026, compared to interest expense, net of $49 thousand for the six months ended June 30, 2025 due to interest income on the IEEPA Tariff Refunds in the second quarter of 2026.

Current wording

Interest (income) expense, net - Interest income, net increased $2.2 million due to interest income on the IEEPA Tariff Refunds in the second quarter of 2026 and investment of increased cash on hand.

Previous wording

Other (income) expense, net - Other income, net was $0.1 million for the six months ended June 30, 2026 compared to other income, net of $0.3 million for the six months ended June 30, 2025.

Current wording

Other (income) expense, net - Other income, net was $0.3 million for the nine months ended September 30, 2026 compared to other expense, net of $0.3 million for the nine months ended September 30, 2025.

Previous wording

Income tax expense (benefit) - The effective tax rate was 24.9% compared to 26.7% in the prior six month period. The effective tax rate was lower for the six months ended June 30, 2026 due to changes in the jurisdictional mix of earnings and a reduction in foreign losses subject to a valuation allowance.

Current wording

Income tax expense (benefit) - The effective tax rate was 25.5% compared to 25.1% in the prior period. The lower effective tax rate in the prior period was primarily due to a favorable discrete tax benefit recognized in the third quarter of 2025.

Previous wording

Operating activities - Net cash provided by operating activities was $61.5 million, compared to cash used of $23.8 million in the prior year, representing an increase of $85.3 million. The increase was primarily driven by the aforementioned IEEPA refunds and lower working capital mainly due to reduced inventory levels as the prior year included accelerated purchases ahead of tariff uncertainty and lower sell through. The 2025 period also included higher incentive compensation and tax payments related to the prior year.

Current wording

Operating activities - Net cash provided by operating activities was $80.5 million, compared to cash used of $14.6 million in the prior year, representing an increase of $95.1 million. The increase was primarily driven by refunds received in the second quarter related to the IEEPA Ruling and lower working capital, mainly due to reduced inventory levels as the prior year included accelerated purchases ahead of tariff uncertainty.

Previous wording

Investing activities - Net cash used for investing activities decreased $0.6 million compared to the prior year.

Current wording

Investing activities - Net cash used for investing activities decreased $1.0 million compared to the prior year.

Previous wording

Financing activities - Net cash used for financing activities decreased $4.1 million compared to the prior year due to lower share repurchases during the first six months of 2026.

Current wording

Financing activities - Net cash used for financing activities increased $21.0 million compared to the prior year due to the paying down of $25.0 million of borrowings, slightly offset by lower share repurchases during the first nine months of 2026.

Previous wording

The obligations under the HBB Facility are secured by all of HBB’s U.S. assets. As of June 30, 2026, the borrowing base under the HBB Facility was $104.3 million and borrowings outstanding were $50.0 million. As of June 30, 2026, Excess Availability (as defined in the HBB Facility) was $54.3 million. The Company may repay outstanding debt from time to time depending on market conditions, cash flow generation, and other factors.

Current wording

The obligations under the HBB Facility are secured by all of HBB’s U.S. assets. As of September 30, 2026, the borrowing base under the HBB Facility was $122.0 million and borrowings outstanding were $25.0 million. As of September 30, 2026, Excess Availability (as defined in the HBB Facility) was $97.0 million. The Company may repay outstanding debt from time to time depending on market conditions, cash flow generation, and other factors.

Previous wording

The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables and inventory of HBB. As of June 30, 2026, interest on outstanding loans under the HBB Facility accrues at a per annum rate equal to, at HBB’s option, either Term Secured Overnight Financing Rate (SOFR) (as defined in the HBB Facility) plus 1.65% or the Base Rate(as defined in the HBB Facility) plus 0.00%. As of June 30, 2026, the HBB Facility requires a fee of 0.20% per annum on the unused commitment there under. The weighted average interest rate applicable to the HBB Facility for thesix months ended June 30, 2026 was 3.26% (after giving effect to 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 and inventory of HBB. As of September 30, 2026, interest on outstanding loans under the HBB Facility accrues at a per annum rate equal to, at HBB’s option, either Term Secured Overnight Financing Rate (SOFR) (as defined in the HBB Facility) plus 1.65% or the Base Rate(as defined in the HBB Facility) plus 0.00%. As of September 30, 2026, the HBB Facility requires a fee of 0.20% per annum on the unused commitment there under. The weighted average interest rate applicable to the HBB Facility for thenine months ended September 30, 2026 was 3.27% (after giving effect to the interest rate swap agreements described below).

Previous wording

To reduce the exposure to changes in the market rate of interest, we have entered into interest rate swap agreements for a portion of the HBB Facility. Terms of the interest rate swap agreements require us to receive a variable interest rate and pay a fixed interest rate. We have interest rate swaps with notional values totaling $50.0 million as of June 30, 2026 at an average fixed interest rate of 1.59%.

Current wording

To reduce the exposure to changes in the market rate of interest, we have entered into interest rate swap agreements for a portion of the HBB Facility. Terms of the interest rate swap agreements require us to receive a variable interest rate and pay a fixed interest rate. As of June 30, 2026, the Company had $50.0 million of borrowings outstanding under the HBB Facility and interest rate swap agreements with an aggregate notional amount of $50.0 million. During the third quarter of 2026, the Company paid down $25.0 million of outstanding borrowings, and in connection with the reduction in borrowings, terminated interest rate swap agreements with an aggregate notional amount of $25.0 million, receiving $0.9 million upon termination. As of September 30, 2026, the Company had $25.0 million of borrowings outstanding under the HBB Facility and a remaining interest rate swap agreement with a notional amount of $25.0 million at a fixed interest rate of 1.78%.

Previous wording

The Company has an arrangement with a financial institution to sell certain U.S. trade receivables of a single customer on a non-recourse basis. See Note 2 - Transfer of Financial Assets included in the unaudited consolidated financial statements contained in Part I of this Form 10-Q.

Current wording

The Company previously had an arrangement with a financial institution to sell certain U.S. trade receivables of a single customer on a non-recourse basis. See Note 2 - Transfer of Financial Assets included in the unaudited consolidated financial statements contained in Part I of this Form 10-Q.