Earnings call transcript: Hamilton Beach Q2 2025 reveals revenue drop, stock dips

Hamilton Beach Brands Holding Co. (HBB) reported its second-quarter 2025 earnings, revealing a decline in revenue and a mixed market reaction. The company’s Q2 revenue stood at $127.8 million, down 18.2% year-over-year. Earnings per share (EPS) were $0.33, missing market forecasts. Following the earnings announcement, HBB’s stock price fell by 3.74% during regular trading hours but showed a slight recovery in aftermarket trading, rising 1.9%. According to InvestingPro data, the company maintains strong fundamentals with a healthy return on equity of 22% and trades at an attractive P/E ratio of 6.38x.

Key Takeaways

• Hamilton Beach’s revenue dropped 18.2% year-over-year in Q2.
• EPS of $0.33 missed analyst expectations.
• Stock fell 3.74% post-earnings but gained 1.9% in aftermarket trading.
• Gross profit margin increased by 160 basis points to 27.5%.
• Company continues to face challenges from increased tariffs and trade tensions.

Company Performance

Hamilton Beach’s performance in the second quarter of 2025 was marked by a significant decline in revenue, attributed primarily to decreased retailer demand and market disruptions from tariff increases on Chinese exports. The company maintained its market leadership in North America, despite these challenges. The introduction of the Lotus brand and strategic inventory management were key operational focuses. InvestingPro analysis shows the company’s strong financial health with a current ratio of 1.97, indicating sufficient liquidity to meet short-term obligations. InvestingPro subscribers have access to 12 additional key insights about HBB’s financial position and growth prospects.

Financial Highlights

• Revenue: $127.8 million, down 18.2% YoY.
• Gross profit: $35.1 million, compared to $40.5 million in Q2 2024.
• Gross profit margin: 27.5%, up 160 basis points.
• Net income: $4.5 million, down from $6 million YoY.
• EPS: $0.33, compared to $0.42 in Q2 2024.

Earnings vs. Forecast

Hamilton Beach’s EPS of $0.33 fell short of analyst expectations, marking a miss in performance. The revenue of $127.8 million also highlighted ongoing challenges in the market, primarily due to trade tensions and tariffs. The magnitude of the miss indicates significant pressure compared to previous quarters.

Market Reaction

Following the earnings report, Hamilton Beach’s stock price dropped 3.74% during regular trading hours, closing at $16.31. However, in aftermarket trading, the stock showed signs of recovery, gaining 1.9% to reach $16.62. This movement reflects investor uncertainty amid challenging market conditions and the company’s ongoing strategic adjustments. InvestingPro’s Fair Value analysis suggests HBB is currently undervalued, with a strong free cash flow yield of 23% and consistent dividend payments for 9 consecutive years.

Outlook & Guidance

The company refrained from reinstating guidance due to ongoing trade negotiations. However, it remains focused on expanding its premium product offerings and growing its commercial business. The Lotus brand is expected to reach full distribution by Q4 2025, with further product launches planned for 2026.

Executive Commentary

CEO Scott Tidey expressed confidence in the company’s strategy and brand portfolio, stating, "We remain confident in our strategy and the strength of our diverse brand portfolio." CFO Sally Cunningham emphasized the company’s approach to share repurchases, noting, "We are open as a philosophical perspective to repurchasing shares when we feel that the shares are undervalued."

Risks and Challenges

• Increased tariffs on Chinese exports impacting cost structure.
• Decreased retailer demand amid trade tensions.
• North American consumer environment remains challenging.
• Ongoing uncertainty in trade negotiations.
• Potential supply chain disruptions due to diversification efforts.

Q&A

During the earnings call, analysts focused on the company’s cost-saving measures and strategic initiatives. The Health Beacon segment reported $1.7 million in revenue but faced an operating loss. Questions also addressed the company’s stock buyback strategy and its impact on shareholder value.

Full transcript - Hamilton Beach Brands Holding Co Class A (HBB) Q2 2025:

Conference Operator: Thank you for standing by. At this time, I would like to welcome everyone to today’s Hamilton Beach Brands Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. Thank you.

So without further ado, I would like to turn the call over to Brendan Frey, Partner with ICR. Brendan, you have the floor.

Brendan Frey, Partner with ICR, ICR: Thanks, Julianne. Good afternoon, everyone, and welcome to the second quarter twenty twenty five earnings conference call and webcast for Hamilton Beach Brands. Earlier today, after the stock market closed, we issued our second quarter twenty twenty five earnings release, which is available on our corporate website. Our speakers today are Scott Tidey, President and CEO and Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer. Our presentation today includes forward looking statements.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in either our prepared remarks or during the Q and A. Additional information regarding these risks and uncertainties is available in our 10 Q, our earnings release and our annual report on Form 10 ks for the year ended 12/31/2024. The company disclaims any obligation to update these forward looking statements, which may not be updated until our quarterly conference call our next quarterly conference call, if at all. The company will also discuss certain non GAAP measures. Reconciliation for Regulation G purposes can be found in our earnings release.

I’ll now turn the call over to Scott. Scott?

Scott Tidey, President and CEO, Hamilton Beach Brands: Thank you, Brendan, and good afternoon, everyone. Thank you for joining us today. After having a strong 2024 and a good start to the year, the second quarter was marked by a dramatic shift in global trade as The U. S. Implemented higher tariffs on imports from most countries in early April.

This included 145% increase on all Chinese exports, which created significant market disruption as purchases were temporarily halted across the industry while The U. S. And China worked towards a longer term agreement. As the increased trade tensions played out and the headlines and the stock market sold off, retailer demand decreased further in Q2 as Q2 got underway. Given this backdrop, we strategically reduced our trade advertising and promotional activities during the quarter to better align with the market conditions.

While we saw purchasing patterns begin to improve following the announcement of a framework for a new China trade agreement in mid May, our U. S. Business was adversely affected throughout a large portion of the quarter. Despite these significant headwinds, I’m incredibly proud of how quickly our team mobilized to implement decisive strategic actions across several fronts at these remarkable industry challenges. First, we meaningfully accelerated our manufacturing diversification efforts away from China to other Asia Pacific countries.

Through careful planning and execution, we successfully implemented foreign trade zone operations and executed strategic inventory prebuilds to help minimize our tariff exposure. Our goal is to continue minimizing tariff exposure going forward. To do so, we are remaining nimble as multiple trade negotiations play out and agreements are finalized. With a more diversified geographical sourcing structure, we have the ability to quickly shift our procurement to markets that are in the best economic interest of the business. Second, we took decisive pricing actions, implementing increases at the June that align with the current tariff rate increases.

I’m pleased to report that our retail partners have been understanding and accepting of these necessary price adjustments, which were carefully balanced to maintain our competitive market position margins. Our strong brand equity and market leadership have enabled us to take these necessary steps while maintaining our value propositions to consumers. Third, we enacted comprehensive cost management measures across the organization, including an 8% reduction in force. In total, we realized $10,000,000 in annualized savings and expect to begin seeing the meaningful benefits of these actions materialize in the 2025. Turning now to the specifics of our second quarter performance.

We faced a challenging consumer environment across North America and our financial results reflected these conditions. Total sales declined 18% driven by lower volumes in our U. S. Consumer business as some retailers paused purchasing and sold through on hand inventory as well as the impact of our strategically constrained marketing initiatives. Despite the headwinds, I’m pleased to report we achieved 160 basis points of gross profit expansion driven by a favorable shift in customer mix including our higher margin commercial and health businesses which helped lessen the impact on profitability to lower sales.

Looking at performance by business, our core business maintained its number one position in units in North America despite the top line headwinds the industry faced in Q2, which is a testament to our brand strength and consumer value proposition. Looking ahead, we remain optimistic about the market opportunities for our core business with key fall placements secured with big box retailers that position us well for the important holiday season. Our premium business performed well to the overall market and our highly anticipated Lotus brand launch started last week exclusively at a strategic premium retailer in store and online. Featured are the Lotus Perfectionist Oven, which employs advanced convection, precision control and an integrated temperature probe to deliver fast performance and flawless results. The Lotus Top Drip Coffee Maker featuring the Accubrew Ground Scale provides consistent flavor to achieve SCA certified Golden Cup coffee standards and the Lotus four Slice Toaster.

Seven Lotus Professional Series products launched in total and broader distribution will occur later in the fourth quarter followed by the Lotus Signature line that will launch in mid-twenty twenty six. It is expected that the Lotus line of products will be heavily supported with over $5,000,000 in marketing support over the next eighteen months. Our commercial business contributed gross margin expansion and profitability from higher penetration of our overall mix in the period. We continue to evaluate new commercial partnership opportunities like our Sunkist agreement we announced earlier this year. The early wins from the development and marketing of Sunkist branded commercial juicers and sectionizers which are used in leading restaurants, schools and a large restaurant chain throughout The U.

S. Are accelerating faster than expected with substantial runway for continued success. We expect SunCast revenue to be about 5% of our commercial business in 2025 and double in 2026. And lastly, our newest business, Hamilton Beach Health, also contributed positively to sales and gross margins this quarter as we continue expanding our specialty pharmacy customer base, develop additional healthcare tools to meet growing market demand and work towards our goal of increasing our patient subscription base by over 50% this year. We remain optimistic about the future growth and opportunities and strong profit potential of this business.

In closing, while near term challenges persist, we remain confident in our strategy and the strength of our diverse brand portfolio. Our decisiveness in addressing the rapidly changing market conditions has positioned the business to weather the current environment and emerge stronger and more resilient. Our price adjustments have been well accepted. Manufacturing diversification continues to progress. Our proactive inventory servicing help minimize the impact of higher tariffs on gross margins and our cost management measures will positively impact operating margin.

These actions along with the strength of our teams give me confidence that Hamilton Beach Brands is well positioned to maintain its market leadership and achieve long term success. With that, I’ll turn it over to Sally.

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: Great. Thank you, Scott, and good afternoon, everyone. As Scott detailed, our second quarter performance reflects the industry wide challenges brought on by higher tariffs that temporarily paused retailer purchase orders. While some of these headwinds lessened as the quarter progressed, visibility continues to be limited. Turning to our results, starting with revenue.

Total revenue in the second quarter was $127,800,000 down 18.2% from last year’s second quarter. The decrease was primarily driven by lower volume in our U. S. Consumer business as some retailers paused their buying when the new tariffs were implemented in order to assess inventory levels and price increases. As the quarter progressed and a pause on the higher tariff rates went into effect until August, retailers resumed buying.

However, as of today, the final tariff rates and the related impacts on consumer buying remains uncertain. Turning to gross profit and margin. Gross profit was $35,100,000 in the second quarter compared to $40,500,000 in the year ago period, reflecting the lower sales volume. However, profit margin increased 160 basis points to 27.5% compared to 25.9 in last year’s second quarter. The increase in gross profit margin in the current quarter was due to a shift in our customer mix within our U.

S. Consumer business along with a larger proportion of sales from our higher margin international commercial and Health Beacon businesses. Selling, general and administrative expenses decreased $1,300,000 to $29,100,000 compared to $30,400,000 in the 2024. The decrease was primarily driven by adjustments to incentive compensation based on the change in our projected annual performance. This was partially offset by a one time severance charge from restructuring actions taken by management to optimize our cost structure.

Operating profit was $5,900,000 or 4.7% of total revenue compared to $10,000,000 or 6.4% of total revenue in the 2024. Income tax expense was $1,600,000 in the second quarter compared to income tax of $3,000,000 a year ago. Net income was $4,500,000 or $0.33 per diluted share compared to net income of $6,000,000 or $0.42 per diluted share a year ago. Quickly summarizing our first half results, revenue was $261,100,000 down 8.2% from the 2024. Gross margin increased 120 basis points to 26%, and operating margin stayed flat at 3.2%.

Now turning to our balance sheet and cash flows. For the six months ending 06/30/2025, net cash used for operating activities was $23,800,000 compared to a net cash provided of $37,100,000 for the six months ended 06/30/2024. The decrease was primarily due to a $50,800,000 impact from changes in inventory and accounts payable, driven by higher inventory from increased tariffs and accelerated purchases in 2025. Slower sales reduced inventory turnover, while fewer purchases in Q2 lowered accounts payable, further affecting cash flow due to the timing difference between inventory buildup supplier payments. During the three months ended 06/30/2025, we continued to return value to our shareholders through the repurchase of approximately 215,000 shares totaling $4,000,000 and paid a total of $1,600,000 in dividends.

On 06/30/2025, our net debt position, or total debt minus cash and cash equivalents and highly liquid short term investments, was $38,700,000 compared to a net debt position of $12,800,000 at the end of the prior year period. As Scott discussed, we are encouraged with the progress that we’ve made over the past three months, diversifying our sourcing structure and lowering our fixed cost base to provide us with great financial flexibility in these uncertain times. That said, it is still unclear how the outcome of ongoing negotiations between The U. S. And most all of its trade partners, combined with current macro and geopolitical events, will impact retailer planning and consumer demand.

Therefore, we are going to refrain from reinstating guidance at this time. That concludes our prepared remarks. We will now turn the line back to the operator for Q and A.

Conference Operator: Thank you. Our first question comes from Adam Bradley from AJB Capital. Please go ahead. Your line is open.

Adam Bradley, Analyst, AJB Capital: Hi, Sally and Scott. I want to start with Health Beacon. Can you tell us a little bit about the second quarter’s performance in that line of business?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: Sure. I mean, we’re I mean, we continue to be pleased with how the business is growing. We think it’s still on path to meet our growth targets with number of patients as well as being profitable by the end of the year. So I think we’re pleased with how that segment’s reporting.

Scott Tidey, President and CEO, Hamilton Beach Brands: And I would say, Adam ahead.

Adam Bradley, Analyst, AJB Capital: Well, Adam, I’d rather hear what you’re gonna say first, and then I can

Scott Tidey, President and CEO, Hamilton Beach Brands: add Go ahead.

Jake Patterson, Analyst, Talanta Investment Group: Go ahead, Adam. That’s okay.

Adam Bradley, Analyst, AJB Capital: In the October, it reported quarterly sales of 1,500,000.0. Will you be reporting in the q second quarter sales and and p and l?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: We will. It’ll be part of our of our segment reporting.

Adam Bradley, Analyst, AJB Capital: Yeah. Can you share that now then if you’re just gonna report that in the queue? What what were its sales in the second quarter?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: I am. I will. I will. Give me a a quick second as I flip to the page to make sure I say the number right. So for the three months ended June 30, the Health business had a $1,700,000 in top line revenue and then an operating segment loss of $864,000 So and this is a significant improvement over over last year.

So last year was $859,000 in revenue. So we, you know, about double top line and then bottom line was about a $2,000,000 loss. So we cut the loss in half year over year. So as I said, it’s still great results. It’s still moving in the direction that we want it to.

We’re still pretty happy with the business.

Adam Bradley, Analyst, AJB Capital: Thank you for that. So I wanna switch to buybacks. The stock has been languishing for a while. Can you give investors, like me, your kind of longer term view of your capital allocation plan as it pertains to buybacks? Is it opportunistic?

Is it kinda formulaic per quarter? What’s governing the decisions of when and how much to buy back stock?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: Yeah. I think, you know, I think that’s a great I think that’s a great question. You know, in terms of stock buybacks, we we break it into two into two pieces. You know, the first piece is that we don’t want any stock issuances to be dilutive. Right?

So we buy back as many shares as we grant as part of our as a part of our compensation package, and that’s about 300,000 shares. So that that’s the first

Adam Bradley, Analyst, AJB Capital: track

Jake Patterson, Analyst, Talanta Investment Group: we’ll per per

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: Per per year. Per year. So the we we look at on a on a on a per year basis, and so this year was around 300,000. And so we seek to repurchase those in in the market. And then the second second piece is opportunistic.

So we do take a look at at the stock, and we take an ops opportunistic view of whether or not we need to be repurchasing stock or not. And we did repurchase quite a bit of stock last year with with that opportunistic lens. For this year, we if you look at the number of shares we bought in the first five months of the year, we’ve met that anti dilution goal. And at this point, we’ll just continue to watch the stock and see if the opportunistic makes sense.

Adam Bradley, Analyst, AJB Capital: Yeah. So to follow-up on that, often the opportunistic price on a lock term basis occurs at the same time as you’re experiencing troubles you are right now. So right now, you’re having to build up your inventory, it looks like this quarter, and eat up some working capital, yet the stock has stayed low. So I’m asking kind of philosophically, what is the view of repurchases? Is Hamilton Beach willing to look at the long run and repurchase even when shares are low going through turbulent market conditions in in sales and earnings?

Or are you holding on to cash during that and then, you know, waiting until skies are clear to make repurchases? I think that’s what it would help investors like me to understand that a little better.

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: You know, given our given our liquidity profile, that’s the first thing that we look at. And then once we’ve met met our anti dilutive goals, I think we are open as a philosophical perspective to repurchasing shares when we feel that the shares are undervalued and our liquidity position kind of is in line with repurchasing shares.

Conference Operator: Our next question comes from Jake Patterson from Talanta Investment Group. Please go ahead. Your line is open.

Jake Patterson, Analyst, Talanta Investment Group: Okay, guys. Just a question on the cost savings program. I know you said 10,000,000 of annualized starting second half. Is there any way to kind of bucket that with your segments? Is that gonna come mostly out of consumer, I would assume?

Or is there any any cost savings on the HP side?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: So of the 10,000,000, that we identified in annualized savings, you know, a good portion of that is is headcount related, and the majority of that is coming, specifically out of the retail the the retail segment, the, the home the home and commercial product segment.

Jake Patterson, Analyst, Talanta Investment Group: Okay. Gotcha. And then, see, I guess, I don’t know if you can discuss this now, but, any other color on the price increases? I know those kind of sound like they were late June, so presumably not a huge impact in the quarter, but just kind of maybe framing some expectations on that going forward if you can.

Scott Tidey, President and CEO, Hamilton Beach Brands: Yes. This is Scott. So I think, if you go back, at the beginning when tariffs started to appear even before April, we had there were some tariffs there and we took a price increase at that point. When we got more clarity around the tariffs that are potentially proposed today, we have taken another price increase that would cover the tariffs that are out there that are being considered and negotiated by country. I think we’re in the same situation as our competition.

And we feel like the retailers understand that because they also are sourcing product as well from these Asia Pacific countries. And so far, we feel like things have been able to be pushed along nicely. We’re able to kind of get back into a normal business cadence with them. I think the challenging thing is there’s still just as Sally indicated, there’s still just unknown tariff negotiations still going on. So we still got to be nimble and able to adjust going forward.

Jake Patterson, Analyst, Talanta Investment Group: Got it. Okay. And then kind of maybe just piggybacking off of that. If I’m looking at this correctly, it looks like the last few years you guys have been minus 4.5, minus 5% on pricing for ’24 and ’23. And as you think about, like I wanna say most of that was kind of giving back some of those excess freight costs that you guys embedded in your product prices.

But when you think about your competitors, how I mean, I’m assuming you guys track this, but how is your pricing kind of compared to competitors over the last couple of years? And then maybe some thoughts on how that looks now moving forward. Like, do you have more wiggle room with pricing to move up relative to competitors or is it kind of even across the board there?

Scott Tidey, President and CEO, Hamilton Beach Brands: I would say it’s kind of even across the board. I think our competitors have the similar challenges that we face whether it be tariff or container rate cost increases. If you look at our distribution points even going back to 2023 and then through 2024, we feel like we’ve got good solid distribution points across multiple channels throughout North America. So from that perspective, we feel very good. I think if you look back historically coming into the second quarter, we were growing top line sales seven quarters in a row.

So we feel like our strategy has been pretty solid. It’s really this unknown issues around tariffs that had to make us adjust. But as I indicated, the retailers understand what’s going on. They’re directly importing products. They’re sourcing products directly.

They’re dealing with our other competitors that are getting products from the same countries where we’re getting ours. And so this is not something that is surprising to the retailer standpoint.

Jake Patterson, Analyst, Talanta Investment Group: Got it. Then the last one, is there is that, restructuring you guys called out, is that material? Or is there any way you can give me the number for that?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: Yeah. The the restructuring charge was about $800,000, for the quarter.

Jake Patterson, Analyst, Talanta Investment Group: Okay. Thanks. That’s all for me.

Conference Operator: Our next question comes from Michael from Morck Capital Management. Please go ahead. Your line is open.

Michael Morck, Analyst, Morck Capital Management: Hello. Michael Morck at Morck Capital here. Just a bigger picture. Back in 2016, you were doing 750,000,000 in revenues, and now you’re doing about 650,000,000 in revenue. So you dropped about a 100,000,000.

So to me, that kinda looks like you had a lot of new products that are fancy and people buy them, but the other ones drop off almost quicker. And going forward, is there a game plan to have the whole company grow at a decent rate? Or do we just got to be treading water?

Scott Tidey, President and CEO, Hamilton Beach Brands: No. I think strategically, we plan to grow. I can’t say that I’m not so sure about that $750,000,000 number that you’re looking at in 2016.

Michael Morck, Analyst, Morck Capital Management: It’s from value lines. It’s from value lines. So I don’t know.

Scott Tidey, President and CEO, Hamilton Beach Brands: I think our peak is a little bit lower than that. But no, think there’s a lot of runway for us to still grow. We feel like our opportunities continue to be in the premium space of the business. If you look at the consumer business in The U. S, about fifty percent forty five percent, 50% of the business is being done in that premium space.

We have a very low share in that. And so we’ve got a lot of effort. And we just talked about Lotus, for example, we feel like is a great brand that we can build out in that space and be very competitive over the next couple of years. Our commercial business is global. We feel like there’s lot of opportunity as well there.

We continue to add partnerships like the Sunkist partnership that we talked about. Not only can be beneficial in North America for that business, but also globally. And then if you look at the Health business, again, we’re expecting 50% increase in our subscriptions there, and that’s tracking throughout the way we expected it month by month. And we feel like there’s a lot of other opportunities as we build out that business to expand and reach more specialty pharmacy companies and reach more pharmaceutical companies in that space and really look at a good growth opportunity. So we’re very focused on the growth side of things.

I think we as I indicated, we were seven quarters consecutive top line growth and we certainly hit the wall here in the second quarter dealing with tariffs. But I think that the whole industry is experiencing that. And we feel like we’ve been working pretty hard to be very nimble and be able to be opportunistic and be producing in the countries that are going to give us the best economic return. That takes a lot of effort. But I also feel like our relationships with our customers remain strong.

Our ability to reach the consumer online and in the stores is still very sound. And so we’re going to continue to grow.

Michael Morck, Analyst, Morck Capital Management: Sounds good. So do you think you can grow in line with GDP going forward then?

Sally Cunningham, Senior Vice President, Chief Financial Officer and Treasurer, Hamilton Beach Brands: I mean, I think, you know, we’re obviously not giving forward looking guidance at this point, but I I do think we’ve said a couple of different times that we have a we have a good strategy and we believe in our strategy. So, you know, we’re we’re we’re we feel good about things that come within our strategy.

Michael Morck, Analyst, Morck Capital Management: Okay. Well, thank you. Thank you.

Conference Operator: This will conclude today’s question and answer session as well as today’s call. Thank you for your participation. You may now disconnect.

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