Hamilton Beach Earnings Decline in Q3, Revenues Increase Y/Y

Core Insights - Hamilton Beach Brands Holding Company (HBB) faced challenges in Q3 2024 due to increased operating expenses and a one-time pension termination charge, but achieved revenue growth driven by strong consumer demand and the acquisition of HealthBeacon [1][3][4] Q3 Results - Quarterly earnings per diluted share were 14 cents, down 81% from 74 cents in Q3 2023, primarily due to higher operating expenses and significant non-cash pension termination expenses [3] - Total quarterly revenues increased by 2% year over year to $156.7 million from$153.6 million, with notable growth in the U.S. and Mexican markets, while revenues in Latin America and Canada declined [4] Profitability Metrics - Gross profit rose by 9.6% to $43.9 million in Q3 2024 from$40.1 million in the prior year, with gross margin expanding by 190 basis points to 28% due to a favorable product mix and lower production costs [5] - Operating profit decreased by 26% to $10.6 million in Q3 2024 from$14.4 million in Q3 2023, attributed to increased SG&A expenses and HealthBeacon's integration costs [6] Costs & Cash Flow - Cost of sales slightly decreased to $112.8 million from$113.5 million in Q3 2023, contributing to gross margin expansion [8] - SG&A expenses rose to $33.3 million in Q3 2024 from$25.6 million, driven by higher employee-related costs and HealthBeacon's integration [9] - Operating cash flow totaled $35.2 million in Q3 2024, down from$68.7 million the previous year, reflecting a normalized post-pandemic working capital environment [10] Liquidity & Capital Allocation - The company ended the quarter with $22.6 million in cash and cash equivalents, up from$1.6 million a year earlier, and net debt decreased to $22.5 million from$49.7 million [13] - Enhanced liquidity allowed the company to fund growth initiatives and return value to shareholders through $4.7 million in dividends and$9.3 million in share repurchases [13] Management Guidance - HBB expects a slight year-over-year revenue increase in 2024, with significant growth in operating profit anticipated due to gross margin expansion [14] - The company is focusing on six initiatives to drive revenue growth, improve margins, and sustain strong cash flow, including boosting sales in North America and integrating HealthBeacon [14] Other Developments - The acquisition of HealthBeacon in February 2024 contributed $1.2 million in revenues in Q3, with expectations for it to contribute to operating profit starting in 2025 [15] - Strategic initiatives include expanding in the premium small appliance market and accelerating digital transformation for long-term growth [15]