Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hamilton Beach Brands Holding Co (NYSE:HBB) achieved low single-digit growth in Q4 2024, exceeding profitability expectations.
• The company maintained strong gross margins above 26% despite a promotionally driven market environment.
• Revenue increased mid-single digits for the full year, driven by successful new product launches and new distribution points.
• Operating profit grew by 23%, and the company generated over $65 million in operating cash flow.
• HBB ended 2024 in a net cash position, allowing for continued shareholder value return through share repurchases and dividends.

Negative Points

• Gross profit margin contracted slightly in Q4 2024 compared to the previous year, due to price reductions on certain products.
• Selling, general, and administrative expenses increased, driven by the addition of Health Beacon expenses.
• Operating profit decreased in Q4 2024 compared to the same period in 2023.
• International revenue declined, partially offsetting gains in North American markets.
• The company faces ongoing challenges with tariffs, although mitigation efforts are underway.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with KURA.

Q: Can you provide an overview of Hamilton Beach Brands' financial performance for the fourth quarter of 2024? A: Scott Tidey, President and CEO, stated that the company achieved low single-digit growth and exceeded profitability expectations. Gross margins remained strong at over 26%, despite a promotionally driven market environment. The full-year revenue increased mid-single digits, with a 300 basis point expansion in gross margins and a 23% growth in operating profit. The company generated over $65 million in operating cash flow, ending the year in a net cash position.

Q: What were the key drivers of growth for Hamilton Beach Brands in 2024? A: Scott Tidey highlighted successful new product launches and new points of distribution as key drivers. The company saw growth in its US consumer business and significant gains in Mexico and Latin America. New product innovations, such as the Flex Brew Advanced 5 in 1 coffee maker, contributed to market share gains in various categories.

Q: How did Hamilton Beach Brands perform in the premium market segment? A: Scott Tidey noted that the company's premium brands, including Brita, Chi, and Clorox, accounted for a mid-teens percentage of overall revenue. The company is still less than 3% penetrated in the $4 billion US premium market, representing an opportunity for growth and margin expansion. New premium product introductions, such as the plant-based milk maker and Chi garment steamer, were well-received by consumers.

Q: What steps has Hamilton Beach Brands taken to mitigate tariff impacts? A: Scott Tidey explained that the company has mitigated 35% of its business from tariff impacts and plans to mitigate another 25% to 35% in 2025. The company expects to offset higher tariffs through select price increases and supplier concessions.

Q: What is the outlook for Hamilton Beach Brands in 2025? A: Sally Cunningham, CFO, stated that the company expects to modestly outperform the industry with revenue growth approaching the mid-single-digit range. Operating profit is expected to increase at a faster rate than revenue, with gross profit margins in line with 2024 levels. The company plans to significantly increase marketing investment to support strategic growth initiatives.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.