Q4 2023 Hamilton Beach Brands Holding Co Earnings Call
Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to Hamilton Beach Brands Holding Company's fourth quarter 2023 earnings call and webcast. All lines have been placed on mute to prevent any background noise.
Ladies and gentlemen, thank you for standing by at this time I would like to welcome everyone to Hamilton Beach brands holding company's fourth quarter. It went last week and in school and webcast.
All lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Louanne Nabhan, head of investor relations. Please go ahead.
They just because I liked there will be a question and answer session. If you would like to ask a question. During this time simply press Star followed then number one on your telephone keypad.
If you would like to withdraw your question again, Chris you started what.
I would now like to turn the conference a week to widen up head to head.
Head of Investor Relations. Please go ahead.
Lou Anne Nabhan: Thank you, Demi. Good morning, everyone. Welcome to our fourth quarter 2023 Earnings Conference Call-In Webcast. Yesterday, after the market closed, we issued our fourth quarter 2023 earnings release and filed our 10-K with the SEC. Copies are available on our website.
Thank you Debbie and good morning, everyone welcome to our fourth quarter 2023 earnings conference call and webcast yesterday. After the market closed we issued our fourth quarter 2023 earnings release and filed our 10-K with the SEC copies are available on our website our speakers.
Lou Anne Nabhan: Our speakers today are Greg Trepp, Chief Executive Officer, and Sally Cunningham, Senior Vice President and Chief Financial Officer. Our presentation today includes forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in either the prepared remarks or during the Q&A.
They are Greg Trepp, Chief Executive Officer, and Sally Cunningham, Senior Vice President and Chief Financial Officer. 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 the prepared remarks remarks or during the Q&A.
Lou Anne Nabhan: Additional information regarding these risks and uncertainties is available in our earnings release and our annual report on Form 10-K for the year ended December 31, 2023. The company disclaims any obligation to update these forward-looking statements, which may not be updated until our next quarterly conference call, if at all.
Information regarding these risks and uncertainties is available in our earnings release and our annual report on Form 10-K for the year ended December 31, 2023, the company disclaims any obligation to update these forward looking statements, which may not be updated until our next quarterly conference call.
Oh, if at all and now I will turn the call over to Greg.
Gregory H. Trepp: I will take the next few minutes to provide an overview of our performance for the full year 2023, and Sally will discuss our fourth quarter. After that, we will take your questions. Before I review our 2023 results, I would like to discuss our exciting news of last month, when we announced that our board of directors appointed Heidi as president of our company, effective February 19th, 2024. Scott's appointment was part of a longstanding succession plan.
Thank you Lou Anne and good morning, everyone and thank you for joining us.
And we'll take the next few minutes to provide an overview of our performance for the full year 2023, and Shelly will discuss our fourth quarter.
After that we will take your questions.
Before I review, our 2023 results I would like to discuss our exciting news of last month.
When we announced that our board of directors appointed Eddie as.
As president of our company effective February 19th 2024.
Women was part of a long standing succession plan.
Gregory H. Trepp: I will continue in my role as Chief Executive Officer. Scott joined the company in 1993 and has served in roles of increasing responsibility in sales and marketing, most recently as Senior Vice President, Global Sales. Scott is an incredibly effective member of our executive leadership team. In addition to his broad experience in sales and marketing, Scott has been involved in most aspects of our business, including managing business partnerships, sourcing, supply chain, engineering, quality, and more. Scott has been instrumental in the successful execution of our strategic initiatives to expand, diversify, and grow our business. Given the strong team we have in place, combined with Scott's depth of experience, the company is well positioned as Scott increases his role. I look forward to working with Scott on a smooth transition of the duties at present. Scott is away this week on a long-planned family vacation, which we wanted him to be able to enjoy to the fullest, so he is not participating in our call today.
I will continue in my role as Chief Executive Officer.
Scott joined the company in 1993.
Served in roles of increasing responsibility in sales and marketing most recently as senior Vice President Global sales.
Scott is an incredibly effective member of our executive leadership team.
And to his broad experience in sales and marketing Scott has been involved in most aspects of our business, including managing business partnerships.
Seeing supply chain engineering quality and more.
He has been instrumental in the successful execution of our strategic initiatives to expand diversify and grow our business.
Given the strong team we have in place combined with Scotts depth of experience. The company is well positioned as Scott increases as well.
Look forward to working with Scott and the smooth transition of the duties as president.
Scott This away this week in a long planned family vacation, which we wanted him to be able to enjoy to the fullest. So he is not participating in our call today, Scott will rejoin us when we hold our call to discuss our first quarter 2024 results.
Gregory H. Trepp: Scott will rejoin us when we hold our call to discuss our first quarter 2024 results. Now for our results, for the year 2023, we delivered considerable progress across several key aspects of our business, positioning us for success over the long term. We were excited to carry the strong momentum we built last year into 2024. Our top line outperformed the small kitchen appliance industry, and our gross profit margin expanded by 290 basis points. Our operating profit increased 22% compared to 2022 when a one-time insurance recovery of 10 million dollars is excluded from the prior year result. It generated cash from operating activities of $88.6 million, the highest in our company's history, reflecting considerable progress with our focus on working capital improvement. Priority uses of cash included significantly reducing debt and returning capital to shareholders through dividends and share repurchases.
Now for our results for the year 2023, we delivered considerable progress across several key aspects of our business positioning it positioning us for success over the long term.
We're excited to carry the strong momentum we built last year into 2024.
Our topline outperformed the small kitchen appliance industry.
Gross profit margin expanded by 290 basis points.
Our operating profit increased 22% compared to 2022, when the one time insurance recovery of $10 million is excluded from the prior year results.
We generated cash from operating activities of $88 6 million the highest in our company's history, reflecting considerable progress with our focus on working capital improvements.
Priority uses of cash included significantly reducing debt and returning capital to capital to shareholders through dividends and share repurchases.
Gregory H. Trepp: We continue to make meaningful progress with our six strategic initiatives. The successes we have achieved are attributable to the outstanding capabilities of our industrious team. Our culture is centered around good thinking, which incorporates customer focus, innovation, and teamwork and inspires everything we do. We believe our good thinking culture is a core strength.
We continue to make meaningful progress with our six strategic initiatives.
The successes, we achieved are attributable to the outstanding capabilities of our industrial team.
Our culture is centered around good thinking which incorporates customer focus innovation and teamwork.
Aspires everything we do we believe are good thinking culture is a core strength.
Gregory H. Trepp: We aim to capitalize on our strengths in 2024 and beyond as we continue our efforts to increase long-term shareholder value. As we discussed in our previous calls, we expected a solid performance for the full year 2023, with a soft first half and a stronger second half, which is how the year unfolded. We introduced nearly 40 new product platforms in 2023, across high-demand categories like single-serve coffee, blenders, ovens, grills, Garmin steamers, and many others.
We aim to capitalize on our strengths in 2024 and beyond as we continue our efforts to.
The increase long term shareholder value.
As we discussed in our previous calls we expected a solid performance for the full year 2023.
With a soft first half and a stronger second half, which is how the year unfolded.
We introduced nearly 40, new product platforms in 2023 across high demand categories like single serve coffee blenders ovens and grills.
Steamers and many others.
Gregory H. Trepp: Our team did an outstanding job securing placements and promotions for our products across a broad range of customers and channels. We also gained market share in several categories in 2023. These wins enabled us to deliver a strong second half performance and created the momentum that carried into 2024. For the full year 2023, our total revenue of $625.6 million increased 2.4% compared to 2022. Outperforming the industry decreased 2.4% compared to 2022, meaning it was more than a 5% decline. The year got off to a slow start, which was reflected in our first half results, and retailers continue to manage inventory conservatively.
Our team did an outstanding job securing placements and promotions for our products across a broad range of customers and channels.
<unk> also gained market share silver categories in 2023.
These wins enabled us to deliver a strong second half performance and created the momentum that carried into 2020 for us.
For the full year 2023.
Total revenue of $625 $6 million increased two 4% compared to 2022.
Outperforming the industry decreased two 4% compared to 2022.
Outperforming the industry is more than a 5% decline.
<unk> got off to a slow start which was reflected in our first half results and retailers continue to manage inventory conservatively as.
Gregory H. Trepp: As the year unfolded, however, market conditions improved as consumer spending and retail sales showed resilience. For the full year, gross profit margin expanded by 290 basis points to 23.0%, compared to 20.1% in 2022, and was attributable to lower product costs and a favorable product mix; selling general and administrative expenses for $108.4 million compared to $90.1 million, primarily reflecting higher personnel-related expenses that benefited from the one-time insurance recovery I mentioned earlier. Operating profit was $35.1 million compared to $38.8 million, well ahead of 2022, excluding insurance recovery. Net income was $25.2 million, or $1.80 per diluted share, compared to net income of $25.3 million, or $1.81 per diluted share.
As the year unfolded, however market conditions improved as consumer spending and retail sales showed resilience.
For the full year gross profit margin expanded by 290 basis points to 23.0%.
Compared to 21% in 2022, and it was attributable to lower product costs and a favorable product mix.
Selling general and administrative expenses for.
$108 $4 million compared to $90 $1 million, primarily reflecting higher personnel related expenses and the benefit in 2020 to the one time insurance recovery I mentioned earlier.
Operating profit was $35 $1 million compared to $38 8 million.
It had a 2022, excluding the insurance recovery.
Net income was $25 $2 million or $1 80 per diluted share compared to net income of $25 $3 million or $1 81 per diluted share.
Gregory H. Trepp: Referring to our strategic initiatives, we made meaningful progress with our six strategic initiatives, which support our overarching goal of long-term value creation by driving revenue growth, expanding margins, and generating strong cash flow over time. Four of our initiatives are focused on expanding our presence in markets where we can increase the sales of higher priced, higher margin products. These include the premium, home health, and global commercial markets, as well as our core market that focuses on our flagship Hamilton Beach and ProctorSolids brands. Initiatives to accelerate our digital transformation and leverage partnerships and acquisitions support our growth plans in all markets. Let me briefly summarize each initiative; accelerating the growth of our Hamilton Beach Health is the first one.
Referring to our strategic initiatives, we made meaningful progress with our six strategic initiatives, which support our overarching goal of long term value creation by driving revenue growth.
Spanning margins and generating strong cash flow over time.
Four of our initiatives are focused on expanding our presence in markets, where we can increase the sales of higher priced higher margin products.
These include the premium home health and global commercial markets as.
As well as our core market that focuses on our flagship Hamilton Beach and practice all its brands.
Initiatives to accelerate our digital transformation and leverage partnerships and acquisitions support our growth plans in all markets.
Briefly summarize each initiative.
Accelerating growth of our Hamilton Beach Health.
The first one I would like to begin with our newest initiative and our related acquisition last month of help beacon.
A medical technology company, and a strategic partner of ours since 2021.
We began to focus on the fast growing home medical market in 2021.
Thoughts to the rapidly evolving use of that home health care solutions.
Gregory H. Trepp: I would like to begin with our newest initiative in our related acquisition last month at Health Beacon, a medical technology company and a strategic partner of ours since 2021. We began to focus on the fast-growing home medical market in 2021 in response to the rapidly evolving use of at-home health care solutions. Drawing on decades of experience as a trusted resource in the home, we created the Hamilton Beach Health Brand. In February 2024, Hamilton Beach Health acquired HealthBeacon. Their focus has been on developing connected devices that enable patients with chronic conditions to manage their injectable medication regimens at home, and Health Beacon provides other health services. The revenue for all Health Beacon offerings is from subscription services.
Drawing on decades of experience as a trusted resource in the home we created the Hamilton Beach Health brand.
In February 2020 for Hamilton Beach Health acquired Health Beacon.
Their focus has been on developing connected devices that enable patients with chronic conditions to manage their injectable medication regimens at home.
Hell speak and provides other health services.
Revenue for all health offerings is from subscription services.
We are very happy to welcome the Hamilton to help Beacon team to the Hamilton Beach brands family.
Together, we believe we will accelerate the expansion of this business opportunity.
In 2020 for Hamilton Beach Health is expected to have a modest operating loss.
Due to planned investments in the business.
And Thats helped Beacon continues in the startup phase.
Hamilton Beach Health is expected to contribute to operating profit in 2025.
Gregory H. Trepp: We are very happy to welcome the HealthBeacon team to the Hamilton Beach Brands family. Together, we believe we will accelerate the expansion of this business opportunity. In 2024, Hamilton Beach Health is expected to have a modest operating loss due to planned investments in the business and as HealthBeacon continues in the startup phase.
We believe the acquisition of <unk> of help Beacon is an attractive investment with a potential to increase shareholder value over time.
We expect growth opportunities to be driven by the development of digitally connected tools using in home solutions, including remote therapeutic monitoring systems.
The acquisition combines the trusted brand name of Hamilton Beach.
Gregory H. Trepp: Hamilton Beach Health is expected to contribute to operating profit in 2025. We believe the acquisition of HealthBeacon is an attractive investment with the potential to increase shareholder value over time. We expect growth opportunities to be driven by the development of digitally connected tools using in-home solutions, including remote therapeutic monitoring systems. The acquisition combines the trusted brand name of Hamilton Beach and our leadership in innovation, engineering, and product development with HealthBeacon's digital capabilities and patented technology. Hamilton Beach Health is focused on improving patient outcomes and accelerating access to more patients and new opportunities. The initial focus is on providing the smart, sharp spin in Hamilton Beach Health to patients in the United States, principally through the Specialty Pharmacy Channel, and globally through conventional pharmaceutical companies. Combined with a companion app, the Injection Care Management System tracks adherence and persistence with medication schedules through reminders, education tools, and artificial intelligence-driven data analytics. Additionally, it provides for the safe and convenient disposal of used sharps through the U.S. The Postal Service's approved mailback program.
And our leadership in innovation engineering and product development.
Withheld beacons digital capabilities and patented technologies.
Hamilton Beach Health is focused on improving patient outcomes and accelerating access to more patients and new opportunities.
The initial focus is on providing smart sharp spin we handled speed shelf to patients in the United States, principally through the specialty pharmacy channel and.
And globally through conventional pharmaceutical companies.
Combined with a companion app the injection care management system tracks adherence and persistence with medication schedules through the reminders education tools and artificial intelligence driven data analytics.
It provides for the safe and convenient disposal disposal of used sharps through.
Through the U S postal Service's approved mail back program.
<unk> health is actively engaged in exploring additional collaboration opportunities with other companies in the whole medical market.
Our next initiative is to drive core growth. This initiative is focused on driving the growth of our flagship Hamilton Beach and practice, Alex brands in our core North American market.
Company has been servicing consumers across North America for more than 100 years, earning the trust of millions of consumers annually based on product quality durability and innovation.
Sales.
Of our core consumer brands in 2023 were even with 2022, despite the overall softness in the first half of the year.
Hamilton Beach continues to hold the number one brand position for small kitchen appliances in 2023 based on years. So.
Gregory H. Trepp: Hamilton Beach Health is actively engaged in exploring additional collaboration opportunities with other companies in the home medical market. Our next initiative is to drive core growth. This initiative is focused on driving the growth of our flagship Hamilton Beach and ProctorSolix brands in our core North American market. Our company has been serving consumers across North America for more than 100 years, earning the trust of millions of consumers annually based on product quality, durability, and innovation. Shales, one of our core consumer brands in 2023 or even with 2022, despite the overall softness in the first half of the year. Hamilton Beach continues to hold the number one brand position for small kitchen appliances in 2023 based on units sold.
Next we are focusing on.
Gaining share in the premium market.
We have developed licensed and acquired brands to increase our participation in the premium market, which has grown to account for 40% of industry small kitchen appliance sales.
In March of last year, we are excited to announce a new agreement to provide the next generation of specialty appliances for use with new milk raw ingredients.
Create a variety of fresh plant based milk products in home and commercial establishments. The new appliances are launching throughout the first half of 2024.
Overall, 4% decrease in revenue from Premier premium brands in 2023 reflected the impact of inflationary pressures on consumer spending earlier in the year.
In the fourth quarter revenue from premium brands increased 10%.
Premium brands accounted for 15% of the total revenue in 2023.
We plan to further expand our presence in the premium market with new product development digital marketing and by pursuing additional licensing agreements and other collaborative agreements.
Gregory H. Trepp: Next, we are focusing on gaining share in the premium market; we have developed, licensed, and acquired brands to increase our participation in the premium market, which has grown to account for 40% of industry small kitchen appliance sales. In March of last year, we were excited to announce a new agreement to provide the next generation of specialty appliances for use with new milk raw ingredients to create a variety of fresh plant-based milk products in the home and in commercial establishments. The new appliances are launching throughout the first half of 2024. The overall 4% decrease in revenue from premium brands in 2023 reflected the impact of inflationary pressures on consumer spending earlier in the year.
Next we are focused on increasing our leadership in the global commercial market.
This initiative is focused on securing new businesses and increasing sales with existing customers in the foodservice and hospitality industries throughout the world.
In 2023 commercial revenue decreased 15% compared to 2022, when the revenue grew 50%.
The prior year robust growth was driven by the continued strong rebound in demand in the foodservice and hospitality industries following demand softness during the pandemic with many restaurants and hotels were closed sale.
Sales in the international Foodservice market accounted for the decrease from the prior year the civil markets were overstocked and unrest in certain countries had an unfavorable impact on sales in 2023 sales of our commercial products accounted for 8% of total revenue.
Gregory H. Trepp: In the fourth quarter, revenue from premium brands increased 10%, and premium brands accounted for 15% of total revenue in 2023. We plan to further expand our presence in the premium market with new product development, digital marketing, and by pursuing additional licensing agreements and other collaborative agreements. Next, we are focused on increasing our leadership in the global commercial market. This initiative is focused on securing new business and increasing sales with existing customers in the food service and hospitality industries throughout the world. In 2023, commercial revenue decreased 15% compared to 2022, when revenue grew 50%. The prior year's robust growth was driven by a continued strong rebound in demand in the food service and hospitality industries following demand softness during the pandemic when many restaurants and hotels were closed. Sales in the international food service market accounted for the decrease from the prior year.
Growth plans include expanding customer relationships with regional and global restaurant and hotel chains.
Building strength in our ecommerce.
Which is becoming more important in the commercial market is also a focus.
Next we plan to accelerate our digital transformation.
The E Commerce channel represents a strong and growing part of our business brand reputation product features innovation and star ratings all play a critical role in driving online sales. These are all areas.
Where we excel.
E Commerce sales as a percentage of total revenue in 2023, or 39%, increasing 1% compared to 2022.
All of our brands for star ratings of $4, three or better in four of our brands earn four five stars or better.
Our products received.
Favorable reviews from consumers.
Experts and Influencers.
High Star ratings are a result of our focus on designing and engineering consumer preferred products.
Renting leading quality control standards.
We continue to invest in gaining share in E Commerce channel.
Finally, we are focused on leveraging partnerships and acquisitions.
Gregory H. Trepp: The various markets were overstocked, and unrest in certain countries had an unfavorable impact on sales. In 2023, sales of our commercial products accounted for 8% of total revenue. Growth plans include expanding customer relationships with regional and global restaurant and hotel chains; building strength in our e-commerce, which is becoming more important in the commercial market, is also a focus. Next, we plan to accelerate our digital transformation. The eCommerce channel represents a strong and growing part of our business. Brand reputation, product features, innovation, and star ratings all play a critical role in driving online sales.
This initiative is focused on identifying and securing businesses with a strategic fit to our portfolio.
Actively engaged in the pursuit of additional trademark licensing agreements strategic alliances and acquisitions to drive growth in our <unk>.
That's.
Including accelerating growth in the home health market.
Over the past several years, we have entered into exclusive.
<unk> with.
With the outstanding business partners, combining our strengths the advantages provided by other companies as a result, we then entered new large and fast growing markets and in some cases created new markets. Many of our collaborations enable us to serve both retail and commercial markets.
Looking ahead, our company has many competitive advantages that we plan to leverage in 2024 and beyond we believe we are well positioned to continue the momentum we carry into 2024 and delivered a solid performance all due to the outstanding work of our team.
Gregory H. Trepp: These are all areas where we excel. E-commerce sales as a percentage of total revenue in 2023 were 39%, increasing 1% compared to 2022. All of our brands earned star ratings of 4.3 or better; four of our brands earned 4.5 stars or better.
As we emerge from the pandemic and its related challenges I want to again recognize our team's incredible work.
The enormous success in navigating us through the massive supply chain disruptions are employees took a one team approach.
So overcoming these challenges often going above and beyond the call of duty under extraordinary pressures.
Gregory H. Trepp: Our products received... favorable reviews from consumers, experts, and influencers. High star ratings are a result of our focus on designing and engineering consumer-preferred products and implementing leading quality control standards. We continue to invest in gaining share in the e-commerce channel. Finally, we are focused on leveraging partnerships and acquisitions. This initiative is focused on identifying and securing businesses with a strategic fit to our portfolio.
Kept focus on key steps needed to ensure a bright future and predict in particular, keeping the pipeline of innovation new products flowing.
Importantly, we kept investing team and company resources into our strategic initiatives.
Combination of short term firefighting and keeping our focus on building for the future requires a very strong team.
On behalf of the board and our executive team.
I, thank each and every one of our employees for their dedication and contribute and contributions to our successes.
And now I will turn the call over to sales.
Great. Thank you Greg Good morning, everyone I'll start with our fourth quarter 2023 results compared to the fourth quarter of 2022.
Gregory H. Trepp: We are actively engaged in the pursuit of additional trademark licensing agreements, strategic alliances, and acquisitions to drive growth in our region. Mark, including Accelerating Growth in the Home Health Over the past several years, we have entered into exclusive agreements with outstanding business partners, combining our strengths and the advantages provided by other companies. As a result, we have entered new, large, fast-growing markets and, in some cases, created new markets. Many of our collaborations enable us to serve both retail and commercial markets.
We were pleased with our fourth quarter 2023 results as expected revenue grew year over year.
Net sales in the fourth quarter of 2023 increased five 3% to $206 $7 million.
<unk> to $196 $2 million in the fourth quarter of 2022.
The revenue growth reflected increased unit volume and favorable mix, partially offset by lower average selling price.
This growth reflected increased sales in our consumer markets overall, partially offset by decreased sales in our global commercial market.
Gregory H. Trepp: Looking ahead, our company has many competitive advantages that we plan to leverage in 2024 and beyond. We believe we are well positioned to continue the momentum we carried into 2024 and deliver a solid performance, all due to the outstanding work of our team. As we emerge from the pandemic and its related challenges, I want to again recognize our team's incredible work and enormous success in navigating us through the massive supply chain disruption. Our employees took a one-team approach to overcoming these challenges, often going above and beyond the call of duty under extraordinary pressure, that kept focus on key steps needed to ensure a bright future, in particular keeping the pipeline of innovative new products flowing. Importantly, we kept investing in team and company resources into our strategic initiatives. The combination of short-term firefighting and keeping our focus on building for the future requires a very strong team, on behalf of the board and our executives. I thank each and every one of our employees for their dedication and contributions to our success. Now, I will turn the call over to you. Great. Thank you, Greg. Good morning, everyone.
And our consumer markets revenue increased in the U S Mexican and Latin American markets and decreased in the Canadian market.
And our global commercial market revenue decreased compared to the fourth quarter of 2022 when revenue grew by 57, 1%.
As Greg mentioned earlier prior year growth in the global commercial commercial market was attributable to a continued strong rebound in demand in the foodservice and hospitality industries.
Growing demand softness during the pandemic with many restaurants and hotels for class.
<unk> decreased due to lower sales in the international foodservice industry as several markets wherever overstock.
As well as to unrest in certain key countries that resulted in an unfavorable impact on sales.
Our gross profit margin expanded by 940 basis points, and mostly reflected lower product costs, which offset a lower average selling price.
Gross profit was $55 $3 million or 26, 8% of total revenue compared to $34 1 million or 17, 4% in the prior year.
Selling general and administrative expenses increased to $32 million compared to $22 $8 million, primarily due to higher incentive compensation advertising.
M&A activities and other expenses.
Getting profit increased significantly to $25 million compared to $11 $3 million last year, reflecting our gross profit margin expansion.
Sally M. Cunningham: I will start with our fourth quarter 2023 results compared to the fourth quarter of 2022. We were pleased with our fourth quarter 2023 results. As expected, revenue grew year over year. Net sales in the fourth quarter of 2023 increased 5.3% to $206.7 million compared to $196.2 million in the fourth quarter of 2022. The revenue growth reflected increased unit volume and favorable mix, partially offset by a lower average selling price.
Net interest expense decreased by $1 $3 million compared to last year.
Fourth quarter of 2023 engine interest expense was $400000 as compared to $1 7 million in the fourth quarter of 2022.
This decrease reflects significantly lower average borrowings outstanding under our revolving credit facility.
The effective tax rate on income for the 12 months ended December 31, 2023 was 24% compared to 22, 1% for the 12 months ended December 31 2022.
Sally M. Cunningham: This growth reflected increased sales in our consumer markets overall, partially offset by decreased sales in our global commercial market. In our consumer markets, revenue increased in the U.S., Mexican, and Latin American markets and decreased in the Canadian market. And our global commercial market, revenue decreased compared to the fourth quarter of 2022, when revenue grew by 57.1%. As Greg mentioned earlier, prior year growth in the global commercial market was attributable to a continued strong rebound in demand in the food service and hospitality industries following demand softness during the pandemic when many restaurants and hotels were closed. The years decreased with lower sales in the international food service industry as several markets were overstocked, as well as due to unrest in certain key countries that resulted in an unfavorable impact on sales.
The effective tax rate was lower for the current year due to the favorable impact of foreign operations in the current year.
Net income in the fourth quarter was $19 6 million or $1 40 per diluted share comp.
Compared to net income of $7 $1 million or <unk> 51 per diluted share in the fourth quarter of 2022.
Now turning to our balance sheet and cash flows.
We continue to deliver significant improvements in networking capital and free cash flow.
For the year ended December 31, 2023, net cash provided by operating activities was $88 $6 million the highest in our company's history compared to cash used for operating activities of $3 4 million for the year ended December 31 2022.
Sally M. Cunningham: Our gross profit margin expanded by 940 basis points and mostly reflected lower product costs which offset a lower average selling price. Gross profit was $55.3 million, or 26.8% of total revenue, compared to $34.1 million, or 17.4% in the prior year. Selling, general, and administrative expenses increased to $30.2 million compared to $22.8 million, primarily due to higher incentive compensation, advertising, M&A activities, and other expenses. Operating profit increased significantly to $25 million compared to $11.3 million last year, reflecting our gross profit margin expansion. Net interest expense decreased by $1.3 million compared to last year.
This significant increase was driven by the by progress with our focus on net working capital improvement.
Net working capital provided cash of $49 5 million in 2023 compared to a use of cash of $39 million in 2022.
Trade receivables used net cash of $18 $8 million during 2023 compared to $4 $5 million.
Provided in the prior year due to timing of collections and increased sales.
We continue to reduce inventory, reflecting our inventory management and control actions throughout 2023 net cash provided by inventory was $30 8 million in 2023.
Compared to $26 4 million net cash provided in 2022.
Net cash provided by accounts payable was $37 $5 million in 2023 compared to $69 $9 million of net cash used in 2022.
Sally M. Cunningham: Fourth quarter of 2023 interest expense was $400,000 as compared to $1.7 million in the fourth quarter of 2022. This decrease reflects significantly lower average borrowings outstanding under our revolving credit facility. The effective tax rate on income for the 12 months ended December 31, 2023 was 20.4% compared to 22.1% for the 12 months ended December 31, 2022. The effective tax rate was lower for the current year due to the favorable impact of foreign operations in the current year.
Capital expenditures in 2023 were $3 $4 million compared to $2 $3 million in 2022.
Primarily due to internal use software development costs.
In 2023, we also issued a $1 6 million secured loan to help beacon.
We allocated our strong cash flow, primarily to reduce debt and return value to shareholders through the quarterly dividend and repurchase of stock.
On December 31, 2023, net debt our debt minus cash and cash equivalents was $34 $6 million compared to $110 million on December 31 2022.
Sally M. Cunningham: Net income in the fourth quarter was $19.6 million, or $1.40 per diluted share, compared to net income of $7.1 million, or 51 cents per diluted share, in the fourth quarter of 2022. Now, turning to our balance sheet and cash flow. We continue to deliver significant improvements in networking capital and free cash flow. For the year ended December 31, 2023, net cash provided by operating activities was $88.6 million, the highest in our company's history, compared to cash used for operating activities of $3.4 million for the year ended December 31, 2022. This significant increase was driven by progress with our focus on net working capital improvement. Networking capital provided cash of $49.5 million in 2023 compared to a use of cash of $39 million in 2022. Trade receivables used net cash of $18.8 million during 2023 compared to $4.5 million provided in the prior year due to the timing of collections and increased sales.
For the full year 2023, we paid $6 $1 million in dividends and repurchased 250772 shares of our class a common stock at prevailing market prices for an aggregate purchase price of $3 $1 million.
Now turning to our outlook for the full year of 2024.
The retail marketplace for small kitchen appliances is expected to be modestly below 2023.
We believe that continued progress with our strategic initiatives will enable us to deliver above market revenue performance.
For the full year 2024, we expect total revenue to increase modestly compared to full year 2023.
Revenue in both the first half and second half of 2024 is expected to increase modestly with the first half expected to be somewhat stronger than the second half, mostly due to comparisons to the prior year.
Operating profit for the full year 2024 is expected to increase moderately compared to 2023 based.
Based on expansion of gross profit margin.
That concludes our prepared remarks, we will now turn the line back over to the operator for Q&A.
Thank you.
<unk> is now all thanks for your questions to ask a question. This time. Please press Star then the number one on your telephone keypad.
Sally M. Cunningham: We continue to reduce inventory, reflecting our inventory management and control actions throughout 2023. Net cash provided by inventory was $30.8 million in 2023, compared to $26.4 million net cash provided in 2022. Net cash provided by accounts payable was $37.5 million in 2023, compared to $69.9 million of net cash used in 2022.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Adam <unk> with <unk> capital. Your line is open.
Hi, Sally and Greg how are you.
Good morning, Adam.
Hey, Vic really good really good quarter, it looks like a record for Q4 income.
<unk>.
Cash flow is even more impressive so all going to see from a shareholder perspective.
I have a few questions I'll start with one or two of them and then pause for a minute.
We'd like to dive a little bit more into the <unk> opportunity.
Sally M. Cunningham: Capital expenditures in 2023 were $3.4 million compared to $2.3 million in 2022, primarily due to internal software development costs. In 2023, we also issued a $1.6 million secured loan to HealthBeacon. We allocated our strong cash flow primarily to reduce debt and return value to shareholders through the quarterly dividend and the repurchase of stock. As of December 31, 2023, net debt, or debt minus cash and cash equivalents, was $34.6 million compared to $110 million on December 31, 2022.
What do you see as like the kind of longer term commercial opportunity withheld speaking.
Yeah.
Sure Adam So help beacon.
As we mentioned is really a subscription services business. So it certainly is very different.
Then the rest of our business.
And it is focused on.
The current device is focused on the ability to help folks manage their injectable.
Medication regime.
So we feel like.
Based on.
Current customers and current uses that are approved that it should be a very attractive.
Opportunity as more and more subscribers come on that will increase the.
Sally M. Cunningham: For the full year 2023, we paid $6.1 million in dividends and repurchased 250,772 shares of our Class A common stock at prevailing market prices for an aggregate purchase price of $3.1 million. Now turning to our outlook for the full year 2024, the retail marketplace for small kitchen appliances is expected to be modestly below the level of 2023.
The monthly subscriptions coming in.
And then if we can expand to additional customers are different different.
Medical or drug regimens overtime that could expand it further so it's a.
A brand new area, where we are.
We're partnering with healthy can now or ever.
<unk> acquired them and the implementing something that doesn't exist right. Now. So there are certainly are.
Loans or it could unfold in a different way than we think but.
Sally M. Cunningham: We believe that continued progress with our strategic initiatives will enable us to deliver above-market revenue performance. For the full year 2024, we expect total revenue to increase modestly compared to the full year 2023. Revenue in both the first half and second half of 2024 is expected to increase modestly, with the first half expected to be somewhat stronger than the second half, mostly due to comparisons to the prior year. Operating profit for the full year 2024 is expected to increase moderately compared to 2023, based on an expansion of the gross profit margin. That concludes our prepared remarks. We will now turn the line back over to the operator for Q&A. The floor is now open for your questions.
We feel it's a very attractive opportunity and as each month in the year goes on and we build the subscriber base that should drive additional subscription revenue and profits over time.
Okay.
So are you also getting revenue from the selling of any of the physical devices or is it all subscription.
It's all subscription so the devices are.
Our or provided.
Users.
In return for a monthly prescription from the spill.
Specialty pharmacy companies or the.
Pharmacy companies so.
So this opportunity really to help patients stick with their regimens, better, which which provides a lot of benefits to the end user as well as the.
Operator: To ask a question this time, please press star, then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Adam Bradley with AJB Capitals. Your line is open. Hi Sally and Greg, how are you? Good morning, Adam.
Specialty pharmacy company so.
It's really.
Purchasing the device rather than placing it and getting a monthly subscription.
Okay that helps thank you and then just.
Finish this.
<unk> speaking.
The distribution channels at least in the U S. You mentioned specialty.
<unk>.
Adam Bradley: Yeah, a really good, really good quarter. It looks like a record for Q4 income, and cashflow is even more impressive. So, all good to see from a shareholder perspective. I have a few questions. I'll start with one or two of them and then pause for a minute; I would like to dive a little bit more into the HealthBeacon opportunity.... What do you see is the kind of longer-term commercial opportunity with HealthBeacon? Sure, Adam.
Pharma services.
Is this new ground for Hamilton Beach, I know youre selling some items in there, but what is that.
Access to distribution looks like with <unk>, we can be in in Ireland. They may know that market well.
What is the what's the plan for here in the U S.
Sure very good question so.
Fortunately the health Beacon team.
<unk> really done has been doing a great job.
Gregory H. Trepp: So HealthBeacon, as we mentioned, is really a subscription services business, so it certainly is very different than the rest of our business, and it is focused on. The current device is focused on the ability to help folks manage their injectable medication regime. And so we feel like, based on current customers and current uses that are approved, that it should be a very attractive opportunity as more and more subscribers come on board, that will increase the monthly subscriptions coming in. And if we can expand additional customers or different medical or drug regimens over time, that could expand it further. So it's a brand new area where we're partnering with HealthBeacon now or have acquired them for implementing something that doesn't exist right now.
Positioning the company for startup and launch and so while there.
A number of the headquarters is based in Ireland Theres number of employees already based here in the U S.
And they have strong relationships with.
And building relationships with specialty pharmacy players, so basically we're going to be taking.
The relationships and the contacts and the.
Business arrangements that already exist both.
Overseas as well as in the U S. But the primary focus has been in the U S by that group already so we feel like we will bring strength in sourcing the unit that is required.
Two to place in the consumer's homes will be able to do that very well, we can ship the units person by person as they become.
Gregory H. Trepp: So there certainly are unknowns, or it could unfold in a different way than we think, but we feel it's a very attractive opportunity. And as each month and year goes on, and we build that subscriber base, it should drive additional subscription revenue and profits over time. Okay, so are you also getting revenue from the sale of any of the physical devices, or is it all subscription? It's all subscriptions, so the devices are provided to end users in return for a monthly prescription from the specialty pharmacy companies or the pharmacy. Pharmacy companies. So it's an opportunity really to help patients stick with their regimens better, which provides a lot of benefits to the end-user as well as the participant. Specialty Pharmacy Company. So it's really not purchasing the device, rather than renting it and getting a monthly subscription. Okay, that helps. Thank you. And then just to finish this on HealthBeacon, the distribution channels, at least in the U.S., you mentioned specialty, now, pharmacies. Is this new ground for Hamilton Beach?
Under the program.
Fortunately the Hell speaking team already had relationships in the Knowhow on the.
Not only that the software and the <unk>.
Patents and all the IP that goes with it but also the relationships with the customers. So I think really when we get together here, we're really bringing a lot of our shrinks with strengths they already had.
Overtime, we will bill.
We are now one team and will both learn from each other so I think the.
The access to an understanding of those customers is not new to the healthy container that is new to Hamilton Beach team and.
And we will just keep.
Morning, and growing and building over time.
And thank you for that so from an accounting standpoint should we expect that the cost of the units will be amortized over the subscription or is there an upfront charge that youll be expensing and then recovering through can you help investors understand what the P&L might look like when we start to see the impact from actuals.
Gregory H. Trepp: I mean, I know you're selling some items in there, but what does the, you know, access to distribution look like? You know, with HealthBeacon being in Ireland, they may know that market well. What is the plan for here in the U.S.? That's a very good question.
Sales and distribution.
Sure. So you want to take that one.
Sure absolutely. So yes, so as the as the units are placed into service there'll be there'll be capitalizing the fixed assets and then the amortization Moshe.
We will show up in our cost of sales number.
Gregory H. Trepp: Fortunately, the HealthBeacon team has been doing a great job, positioning the company for startup and launch. And so while a number of the headquarters are based in Ireland, there's a number of employees already based here in the U.S., and they have strong relationships with, and are building relationships with, specialty pharmacy players.
This is more of a lease accounting type of approach.
Is that what you would expect to see.
Okay. Thanks that makes sense. So finally on this.
You mentioned, there will be a loss in 'twenty four as you kind of build the business are you going to break that out so investors can separate that from the rest of the business.
Gregory H. Trepp: So basically, we're going to be taking the relationships and the contacts and the business arrangements that already exist, both overseas as well as in the U.S., but the primary focus has been the U.S. by that group already. So we feel like we'll bring strength in sourcing the unit that is required to place in the consumers' homes. We'll be able to do that very well. We can ship the units person by person as they become part of the program.
Sally will take that one too.
Sure you know at this point, we don't plan to it it's not a significant portion of the business.
As the business would grow then I would expect it to be more meaningful and we will be breaking out Hamilton details as a whole.
Okay Alright.
Alright. Thanks.
Another question, but I'll pause here in case someone else once again.
Again, if you would like to ask a question press star one on your telephone keypad.
Gregory H. Trepp: Fortunately, the Health Beacon team already had relationships and the know-how on not only the software and the patents and all the IP that goes with it, but also the relationships with the customers. So I think when we get together here, we're really bringing a lot of our strengths together with strengths they already had. And over time, we'll, you know, we'll. We are now one team, and we'll both learn from each other. So I think the access to and understanding of those customers is not new to the HealthBeacon team. It is new to the Hamilton Beach team.
Another question from Adam <unk> with <unk> capital Your line is open.
So moving down the P&L to the SG&A.
SG&A line. This is this number from a just from a financial reporting standpoint has been pretty predictable in that $100 million to $105 million range over the last couple of years that has grown COVID-19 volatility aside.
$108 million for that line. This year should we expect that to be the baseline for 'twenty four and how.
How much of the $108 million was may be performance based comp that is more variable.
Gregory H. Trepp: And we'll just keep learning and growing and building over time. And thank you for that. So from an accounting standpoint, should we expect that the cost of the units will be amortized over the, you know, subscription? Or is there an upfront charge that you'll be expensing and then recovering through?
Just help.
Help me understand that number a little better.
Sure Yeah, I'll give you a little bit of color in Sally jump in.
As well, but I think.
We have some normal variability as you said so they're <unk>.
Sally M. Cunningham: Can you help investors understand what the P&L may look like when we start to see the impact from actual, you know, sales and distribution? Or do you want to take that one? Sure, absolutely. So, as the units are placed into service, they'll be they'll be capitalized into fixed assets, and then the amortization will show up in the cost of sales number. There's more of a lease accounting type of approach than you would expect to see. Okay, thanks. That makes sense.
One year, it might be a little more incentive comp than the other.
Depending on our goals at the beginning of the year.
We're investing we went through a phase of some heavier investing in.
And parts of our business and.
And as we go forward now I think we expect.
Really I think.
Modest.
Growth in SG&A, we are consider things like putting more money into advertising.
That will be dependent on the customer support so I think this is a.
Pretty good.
Line, where it could float up a little bit of a slowdown but based on the level of advertising based on incentive comp results or <unk>.
Sally M. Cunningham: So finally, on this, you mentioned there will be a loss in 24 as you kind of build a business. Are you going to break that out so investors can separate that from the rest of the business? Sally, do you want to take that one too?
Some other investments but.
I don't predict or don't believe has changed dramatically up or down.
Sally M. Cunningham: Sure. But you know, at this point, we don't plan to. It's not a significant portion of the business, but certainly, as the business grows, then I would expect it to be more meaningful, and we would be breaking out Hamilton Beach Health as a whole. All right, thanks. I have another question, but I'll pause here in case someone else wants to get in. Again, if you would like to ask a question, press star 1 on your telephone keypad.
From that level.
So that okay.
Yeah, Yeah, absolutely absolutely I mean, I do think that.
When we talked about the different growth drivers there certainly was some personnel costs and incentive comp.
Also had M&A costs and this year that we haven't had in the past and then we also.
With our growth drivers I would expect for us to see additional kind of advertising costs. So far this year, maybe think of it as.
Maybe Jeremy round numbers like.
Adam Bradley: Another question from Adam Bradley with AGB Capital. Your line is open. Yeah, so moving down the P&L to the SG&A line, this number from a financial reporting standpoint has been pretty predictable in that 100 to 105 million range over the last couple of years that has grown COVID volatility aside. 108 million for that line this year.
Maybe 30, 30, 30, like 38% comp 30%.
M&A and then and then advertising.
And then from a baseline perspective, I think you know as we look at M&A you could expect that number to go up in the future and as we look to continue our strategic investments that could go up but but I continue to believe that lake that that 108 to 110 115 level is probably the right the right place for us right now.
Gregory H. Trepp: Should we expect that to be the baseline for 24? And how much of the 108 million was maybe performance-based comp that's more variable? Just help me understand that number a little better. Sure, yeah, I'll give you a little bit of color, and Sally will jump in as well.
Okay. Thanks.
And kind of looking more broadly at your strategic initiatives and your capital allocation plan.
Gregory H. Trepp: But I think, you know, we have some normal variability, as you said, so one year might be a little more incentive compliant than the other, depending on our goal set at the beginning of the year. You know, we're investing; we went through a phase of some heavier investing in parts of our business, and, you know, as we go forward now, I think we expect, really, a modest growth in SG&A. We are going to consider things like putting more money into advertising. That will be dependent on customer support.
This is very very helpful. You guys have been consistent and Youre reporting on it.
I think what would help is if we if you could help us dive a little deeper into it to understand it.
They are stayed at each quarter end.
Could you help us understand the specific financial performance of each plan.
When you restate your Tim I think like for today could you just kind of give us a little bit of a better understanding of the specifics of each initiative, which one has a greater impact on the P&L.
Gregory H. Trepp: So I think this is a pretty good line where it could float up a little bit or float down a little bit based on, you know, the level of advertising or based on incentive comp results or some other investments, but they helped it. I don't predict, I don't believe it's changed dramatically up or down from that level. Hopefully, I said it okay, Sally.
We understand core I think we understand some of the premium, but just diving a little bit more to the health market and what the opportunities there are.
Yes, sure I mean the core.
Just given us the <unk>.
<unk>.
Our business.
<unk> received a lot of investment in.
Sally M. Cunningham: Yeah, yeah, absolutely. Absolutely. I mean, I do think that, you know, when we talked about the growth drivers, there certainly were some personnel costs and incentive comps. You know, we also had M&A costs this year that we haven't had in the past. And then we also, you know, with our growth drivers, I would expect us to see additional kinds of advertising costs. So, for this year, maybe think of it as maybe these are gonna be round numbers, like, you know, maybe 30, 30, 30, like 30%, comp 30%. M&A and then advertising.
Team members.
New product innovation engineering quality.
Making sure that our.
All the things we talked about our products, we have fresh new products, we're supporting our customers' needs both in brick and mortar and.
And online so that definitely receives a high high portion.
And if we can keep growing our market share in our.
Sure.
Our business that will.
Stay close as a percent of net sales, but should grow in raw dollar amount.
I think our hope is that the premium market will see an increase in investment.
Things like new milk.
Some of our other things we're working on.
Sally M. Cunningham: And then from a baseline perspective, I think, you know, as we look at M&A, you could expect that number to go up in the future. And as we look to continue our strategic investments, that could go up, but I continue to believe that the 108 to 110, 115 level is probably the right place for us right now. Okay, thanks.
Closer to launch and certainly home health.
Hamilton Beach Health.
Area will not only with <unk>, but with other other opportunities, where we are considering and pursuing could come in.
Drive some additional investment in that area.
The digital focus.
Pins all areas.
Does the acquisitions could be up.
A large spike in investment at one other things come along but I think from a standpoint of.
Adam Bradley: And kind of looking more broadly at your strategic initiatives and your capital allocation plan is very, very helpful. You guys have been consistent in your reporting on it. I think what would help is if you could help us dive a little deeper into it to understand it, um, you know they're stated each quarter, and could you help us understand the specific financial performance of each plan when you restate them?
Thinking about maybe as a percent of net sales that we would see.
Consistent.
Higher dollars as time goes on the core and then.
Increasing premium and then a larger increasing in the HB health.
So it sounds like in general you are maybe entering a phase of more investment because you see sales and profit opportunity.
Gregory H. Trepp: I think like for today, could you just kind of give us a little bit of a better understanding of the specifics of each initiative, which one has a greater impact on the P&L? I think we understand core, I think we understand some of the premium, but just diving a little bit more into the health market and what the opportunities there are. Yeah, sure. I mean, the core, given the magnitude of our business, receives a lot of investment in team members, new product innovation, engineering quality, making sure that all the things we talked about, our products, we have fresh new products, and we support our customers' needs, both in brick and mortar and online. So that definitely receives a high portion.
Generally speaking is that is that accurate now that we're through COVID-19 at my hearing you correctly.
Absolutely I think again we're.
Mindful of.
We want to expand our our operating profit.
Dollars and percentage.
And so really what will happen is that we can achieve our.
Goals verticals over time.
That will help.
Help support.
This.
Additional investment.
The <unk> business or the HP health business would it be sort of turnaround slower than we thought our growth slower than we think.
We're going to still invest in it but we're not going to pour money into it.
That is not supported by the results. So I think what you hopefully you will see is these.
Gregory H. Trepp: And if we can keep growing our market share, and our business, that will stay close as a percent of that sales but should grow in raw dollar amounts, um, I think our hope is that the premium market will see an increase in investment as things like New Milk and some of our other things we're working on come closer to launch. And certainly, home health, the Hamilton Beach health area, will not only help Beacon, but other opportunities we're considering and pursuing could come in, would certainly drive some additional investment in that area. The digital focus underpins all areas, as does, you know, and the acquisitions could be a large spike in investment when other things come along. But I think from the standpoint of thinking about maybe as a percent of that sales, we would see consistent percentage higher dollars as time goes on, on the core, and then increasing premiums and then a larger increase in HP health. So it sounds like, in general, you are maybe entering a phase of more investment because you see sales and profit opportunities, generally speaking. Is that accurate?
These investments, we will pullback or lean in.
As they are successful or maybe take a little more time or.
Or take off or don't work out.
There's been some in the past that we walked away from because we tried and they didn't work. So I think youll continue to see us pushing hard on all of these that we're very very optimistic on all of them.
But we're going to be very mindful of the.
Of the P&L as we as we move forward and the impact that the investments will have.
Okay and then finally, what are you what are you seeing on the M&A front multiples in the consumer goods space have been.
Unlike at or near cyclical lows over the if you look back over a longer period like forget Tobey, but keep looking back further so maybe theres good opportunity out there can you tell us a little bit about what youre seeing without having to be specific from just the pure acquisition standpoint would you do a big deal. If you saw one would you like to do a bunch of smaller ones.
But just help a little bit with your thinking on.
Acquisition.
Sure.
I'll take the take that first habitat and Sally you chime in please but.
Gregory H. Trepp: You know, now that we're through COVID, am I hearing you correctly? um, absolutely. I think, you know, again, we're mindful of, we want to expand our operating profit, dollars, and percentage, and so really, what will happen is that we can achieve our goals, both goals over time, that will help support this additional investment. If the HealthBeacon business or the HP Health business were to sort of turn around slower than we thought or grow slower than we think. We're going to still invest in it, but we're not going to pour money into it at a rate that is not supported by the results. So I think what you hopefully will see is these investments; we will pull back or lean in as they are successful or maybe take a little more time or go off or don't work. There have been some in the past that we walked away from because we tried them and they didn't work.
I think.
The spin.
The flow of opportunities has actually been pretty low.
It hasn't been hasn't been <unk>.
Zero, but it's been pretty light much lighter than it was during COVID-19.
And but I think our appetite is there.
There's a good opportunity to build long term shareholder value whether it's.
Smaller medium, where we would be very very interested in that.
So there is potential for a very large deal some sort, but those those also very hard to make those things work.
But I.
I think we are definitely open to.
Really in all of these strategic initiatives Gary.
Additional acquisitions I will say the.
<unk> health is probably.
Very interesting area number one because we feel like there's a lot of opportunity to growth there but also.
We found there's a lot of times of not only from a.
Investment standpoint of funds, but also just the capabilities. There's a number of companies out there that are.
Really.
Interesting position.
I don't have all the <unk>.
Gregory H. Trepp: So I think you'll continue to see us pushing hard on all these. We're very, very optimistic about all of them. But we're going to be very mindful of the P&L as we move forward and the impact that the investments will have. Okay, and then finally, what are you seeing on the M&A front? Multiples in the consumer goods space have been, like, at or near cyclical lows over the past, if you look back over a longer period, like forget COVID but keep looking back further.
Capabilities that we have and so when we come together, it's it can make a pretty pretty attractive opportunities like the healthy can opportunities. So.
I think you've got to be careful we don't want to get too into.
And there are some things too early.
I think.
There's a lot of opportunity in that space as well. So I think right now where we have our hands full with our initiatives and our programs, but we are very very interested in analyzing it anything that comes along.
And that would support one of our initiatives.
Yeah, I think I think that's exactly right Greg.
With the emergence of Hamilton Beach House, we're certainly looking at a pipeline of opportunities.
Adam Bradley: So maybe there's a good opportunity out there. Can you tell us a little bit about what you're seeing without having to be specific from just a pure acquisition standpoint? Would you make a big deal if you saw one?
And talking and talking to different folks as.
As we do think that is an area for us in the future and then for our other commercial and consumer brands, we always take an opportunistic approach.
Gregory H. Trepp: Would you like to do a bunch of smaller ones? Like just help a little bit with your thinking on acquisition. Sure, I'll take that first stab at that. And Sally, you could chime in, please?
And are always looking and we will assess each one as they go along but.
Absolutely possible that we could have a deal but nothing in the pipeline right now.
Gregory H. Trepp: But, you know, I think the flow of opportunities has actually been pretty low, hasn't been, hasn't been zero, but it's been pretty light, much lighter than it was during COVID. And but I think our appetite is If there's a good opportunity to build long-term shareholder value, whether it's small or medium, we would be very, very interested in that. So there's potential for a very large deal of some sort, but those, you know, those are often hard to make those things work.
Okay. Thanks. So thank you for all of that really not only good quarter, but very good performance kind of coming out of Covid, it's great to see cash flow in and working capital coming back in line. This is my view than a cash producing business given where it is in its lifecycle and just all.
Around goods. So thanks for thanks for answering my questions and great job.
Gregory H. Trepp: But I think we are definitely open to, really, in all these strategic initiative areas, additional acquisitions. I will say that Hamilton Beach Health is probably a very interesting area, number one, because we feel like there's a lot of opportunity for growth there, but we also found that there are a lot of times that not only from a funding standpoint of funds but also just capabilities. There are a number of companies out there that have really interesting positions but don't have all the capabilities that we have. And so when we come together, it can make a pretty attractive opportunity, like the HealthBeacon opportunity. So I think we've got to be careful.
Thanks, Ed I appreciate it.
There are no further questions at this time I'll turn the call back over to Greg correct.
Okay. Thank you. So today, we discussed our continued efforts to build long term shareholder value supported by our many competitive advantages and our strategic initiatives.
That's it from our leadership in the small kitchen appliance industry.
Which is a long strong durable demand.
Our team is experienced with strong industry customer and consumer knowledge.
We are a proven innovator our retailer relationships span a broad group of customers and the brick and mortar omnichannel and e-commerce only channels.
Gregory H. Trepp: We don't want to get too into some things too early, but I think we think there's a lot of opportunity in that space as well. So I think right now we have our hands full with our initiatives and our programs. But we are very, very interested in analyzing anything that comes along that would support one of our initiatives. Yeah, I think I think that's exactly right, Greg.
We have an asset light global infrastructure, we plan to leverage all of these strengths in 2024 and beyond that concludes our report for today.
You again for joining our call.
This concludes today's conference call you may now disconnect.
Yeah.
[music].
Sally M. Cunningham: So with the emergence of Hamilton Beach Health, we're certainly looking at a pipeline of opportunities and talking and talking to different folks, as we do think that is an area for us in the future. And then for our other commercial and consumer brands, we always take an opportunistic approach and are always looking, and we'll assess each one as they go along. But it is absolutely possible that we could have a deal, but nothing is in the pipeline right now.
Sure.
[music].
Yes.
[music].
Adam Bradley: Okay, thanks. So thank you for all of that. You know, really, not only a good quarter but a long, very good performance kind of coming out of COVID.
Yeah.
[music].
Adam Bradley: It's great to see cash flow and, and, and working capital coming back in line. This is, in my view, a cash-producing business, given where it is in its lifecycle and just all around good. So thanks for thanking me for answering my questions and a great job. Thanks, Adam; I appreciate it. There are no further questions at this time. I turn the call back over to Greg Trepp. Okay, thank you.
Yes.
[music].
Okay.
[music].
Yes.
Yes.
[music].
Gregory H. Trepp: So today we discussed our continued efforts to build long-term shareholder value, supported by our many competitive advantages in our strategic initiative. We benefit from our leadership in the small kitchen appliance industry, which has a long, strong, durable reputation. Our team is experienced with strong industry, customer, and consumer knowledge. We are a proven innovator. Our retailer relationships span a broad group of customers in the brick and mortar, omni-channel, and e-commerce only channels. We have an acid-light global infrastructure.
Okay.
Okay.
[music].
Yes.
Thank you.
[music].
Okay.
[music].
Sure.
[music].
Yeah.
Okay.
Gregory H. Trepp: We plan to leverage all these strengths in 2024 and beyond. That concludes our report for today. Thank you again for joining our call. This concludes today's conference call. You may now disconnect.
[music].