Shares of Hamilton Beach Brands Holding Company HBB have gained 8% since it reported fourth-quarter 2024 earnings. This compares to the S&P 500 index’s 0.1% decline over the same time frame. Over the past month, the HBB stock has rallied 18.5% against the S&P 500’s 2% decline.
Revenue & Earnings Performance
Hamilton Beach reported quarterly earnings per diluted share of $1.75, up 25% from $1.40 in the same quarter of 2023.
For the fourth quarter of 2024, revenues were $213.5 million, a 3.3% year-over-year increase from $206.7 million. The revenue rise was attributed to higher volume and a favorable product mix, partially offset by pricing and foreign currency headwinds.
The gross margin for the quarter declined 70 basis points to 26.1% from 26.8% in the prior-year quarter due to planned price reductions following lower input costs. However, for 2024, the gross margin expanded 300 basis points to 26%, marking a record high since the company became a stand-alone public entity in 2017.
Fourth-quarter operating profit declined 5.7% to $23.6 million from $25 million in the prior-year period. Net income for the quarter, however, rose 22.6% to $24 million from $19.6 million a year ago. The increase was primarily driven by a $4.3-million foreign tax benefit and a change in U.S. tax accounting, both of which will not recur.
Hamilton Beach Brands Holding Company Price, Consensus and EPS Surprise
Hamilton Beach Brands Holding Company Price, Consensus and EPS Surprise
Hamilton Beach Brands Holding Company price-consensus-eps-surprise-chart | Hamilton Beach Brands Holding Company Quote
Key Business Metrics
The operating cash flow for the year was $65.4 million compared with $88.6 million in 2023, which benefited from post-pandemic working capital improvements. Working capital contributed $14.5 million in 2024 compared with $49.5 million in the previous year.
Selling, general and administrative (SG&A) expenses increased to $32.1 million in the quarter from $30.2 million in the fourth quarter of 2023. This increase was largely driven by the addition of $2.1 million in expenses from the HealthBeacon acquisition, partially offset by slightly lower employee-related costs. Full-year SG&A expenses rose year over year to $126.7 million from $108.4 million, reflecting additional HealthBeacon costs, increased employee-related expenses and higher outside service costs, including $1 million in M&A transaction costs.
At the end of 2024, the company reported a net cash position of $0.6 million, a significant improvement from the net debt of $34.6 million at the end of 2023. The total debt remained at $50 million. In the year, HBB repurchased 668,785 shares of Class A common stock for $14.1 million and paid out $6.3 million in dividends.
Management Commentary
President and CEO R. Scott Tidey highlighted that the company achieved its top and bottom-line targets despite a promotionally driven market environment during the holiday season. He attributed the company's expansion into underserved markets, including premium and commercial small appliances, to its strong financial position.
Tidey also emphasized HBB’s commitment to innovation, citing successful product launches in 2024, including the FlexBrew Coffee Maker, Clorox air purifiers, and CHI garment steamers. Additionally, he noted that the company gained market share in the United States and international markets, particularly in Mexico, wherein it became the third-largest small appliance brand.
Factors Influencing Performance
The company’s year-over-year revenue increase was supported by higher volumes in North America, particularly in the U.S. consumer market. However, it faced slight revenue declines in its Global Commercial segment due to softness in international markets. The February 2024 acquisition of HealthBeacon contributed $1.7 million to fourth-quarter revenues and $4.3 million for the year.
The decline in fourth-quarter operating profit was attributed to price reductions implemented to reflect lower input costs, which previously supported margin expansion. Despite the short-term impacts, the company maintained its gross margin above the historical levels.
Interest expenses for the quarter decreased to $0.3 million from $0.4 million, reflecting lower borrowings and interest rates. The full-year interest expenses fell to $0.6 million from $3 million in 2023.
2025 Guidance
Looking ahead, Hamilton Beach expects the small kitchen appliance retail market to grow in the low-single-digit range in 2025. The company anticipates outperforming the industry with revenue growth approaching the mid-single-digit range.
Operating profit is expected to rise at a faster pace than revenues, benefiting from operating leverage, a decrease in HealthBeacon-related SG&A expenses and stable gross profit margins. However, this will be partially offset by a planned increase in advertising expenses to support growth initiatives.
Management has addressed potential tariff concerns, noting that it has already mitigated the impacts on 35% of its products and aims to increase this figure to 75% by the end of 2025. The company expects to counteract additional tariff-related costs through selective price increases and supplier concessions.
Cash flow from operating activities less cash used for investing activities is projected between $40 million and $50 million for the year.
Other Developments
In the fourth quarter, HBB continued its expansion into the healthcare sector through the integration of HealthBeacon. The company is focusing on scaling HealthBeacon’s remote therapeutic monitoring system, Smart Sharp Spin, which is distributed primarily through specialty pharmacies. The system had approximately 32,000 patient subscriptions as of the end of 2024, and the company aims to grow this base by more than 50% through partnerships with new and existing specialty pharmacies, including OptumHealth.
The company expanded its sourcing diversification strategy to reduce reliance on China. By the end of 2024, HBB mitigated sourcing risk for 35% of its business. It expects to extend this to 75% by the end of 2025.
Conclusion
Hamilton Beach closed 2024 with solid revenue growth, a record-high gross margin and a strengthened balance sheet. The company’s expansion into premium and healthcare markets, combined with its focus on innovation and operational efficiency, positions it for continued growth in 2025. While planned advertising spend and potential tariff impacts remain factors to monitor, management's guidance suggests confidence in maintaining profitability and cash flow generation in the coming year.
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