(Mark One) | |||||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to |
(Exact name of registrant as specified in its charter) | |||||||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
(Address of principal executive offices) | (Zip code) | ||||||||||||||||
(Registrant's telephone number, including area code) | |||||||||||||||||
N/A | |||||||||||||||||
(Former name, former address and former fiscal year, if changed since last report) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | þ | Non-accelerated filer | o | Smaller reporting company | Emerging growth company |
Page Number | |||||||||||||||||
Part I. | FINANCIAL INFORMATION | ||||||||||||||||
Item 1 | Financial Statements | ||||||||||||||||
Item 2 | |||||||||||||||||
Item 3 | |||||||||||||||||
Item 4 | |||||||||||||||||
Part II. | OTHER INFORMATION | ||||||||||||||||
Item 1 | |||||||||||||||||
Item 1A | |||||||||||||||||
Item 2 | |||||||||||||||||
Item 3 | |||||||||||||||||
Item 4 | |||||||||||||||||
Item 5 | |||||||||||||||||
Item 6 | Exhibits | ||||||||||||||||
MARCH 31 2022 | DECEMBER 31 2021 | MARCH 31 2021 | |||||||||||||||
(In thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Current assets | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Trade receivables, net | |||||||||||||||||
Inventory | |||||||||||||||||
Prepaid expenses and other current assets | |||||||||||||||||
Total current assets | |||||||||||||||||
Property, plant and equipment, net | |||||||||||||||||
Goodwill | |||||||||||||||||
Other intangible assets, net | |||||||||||||||||
Deferred income taxes | |||||||||||||||||
Deferred costs | |||||||||||||||||
Other non-current assets | |||||||||||||||||
Total assets | $ | $ | $ | ||||||||||||||
Liabilities and stockholders' equity | |||||||||||||||||
Current liabilities | |||||||||||||||||
Accounts payable | $ | $ | $ | ||||||||||||||
Accrued compensation | |||||||||||||||||
Accrued product returns | |||||||||||||||||
Other current liabilities | |||||||||||||||||
Total current liabilities | |||||||||||||||||
Revolving credit agreements | |||||||||||||||||
Other long-term liabilities | |||||||||||||||||
Total liabilities | |||||||||||||||||
Stockholders' equity | |||||||||||||||||
Class A Common stock | |||||||||||||||||
Class B Common stock | |||||||||||||||||
Capital in excess of par value | |||||||||||||||||
Treasury stock | ( | ( | ( | ||||||||||||||
Retained earnings | |||||||||||||||||
Accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||
Total stockholders' equity | |||||||||||||||||
Total liabilities and stockholders' equity | $ | $ | $ |
THREE MONTHS ENDED MARCH 31 | |||||||||||
2022 | 2021 | ||||||||||
(In thousands, except per share data) | |||||||||||
Revenue | $ | $ | |||||||||
Cost of sales | |||||||||||
Gross profit | |||||||||||
Selling, general and administrative expenses | |||||||||||
Amortization of intangible assets | |||||||||||
Operating profit (loss) | |||||||||||
Interest expense, net | |||||||||||
Other expense (income), net | |||||||||||
Income (loss) before income taxes | |||||||||||
Income tax expense (benefit) | |||||||||||
Net income (loss) | $ | $ | |||||||||
Basic and diluted earnings (loss) per share | $ | $ | |||||||||
Basic weighted average shares outstanding | |||||||||||
Diluted weighted average shares outstanding |
THREE MONTHS ENDED MARCH 31 | |||||||||||
2022 | 2021 | ||||||||||
(In thousands) | |||||||||||
Net income (loss) | $ | $ | |||||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Foreign currency translation adjustment | ( | ||||||||||
(Loss) gain on long-term intra-entity foreign currency transactions | ( | ||||||||||
Cash flow hedging activity | |||||||||||
Reclassification of foreign currency adjustments into earnings | |||||||||||
Reclassification of hedging activities into earnings | ( | ||||||||||
Reclassification of pension adjustments into earnings | |||||||||||
Total other comprehensive income (loss), net of tax | |||||||||||
Comprehensive income (loss) | $ | $ |
THREE MONTHS ENDED MARCH 31 | |||||||||||
2022 | 2021 | ||||||||||
(In thousands) | |||||||||||
Operating activities | |||||||||||
Net income (loss) | $ | $ | |||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ||||||||||
Stock compensation expense | |||||||||||
Brazil foreign currency loss | |||||||||||
Other | |||||||||||
Net changes in operating assets and liabilities: | |||||||||||
Affiliate payable | ( | ||||||||||
Trade receivables | |||||||||||
Inventory | ( | ||||||||||
Other assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Other liabilities | ( | ||||||||||
Net cash provided by (used for) operating activities | ( | ( | |||||||||
Investing activities | |||||||||||
Expenditures for property, plant and equipment | ( | ( | |||||||||
Net cash provided by (used for) investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Net additions (reductions) to revolving credit agreements | |||||||||||
Cash dividends paid | ( | ( | |||||||||
Other financing | ( | ||||||||||
Net cash provided by (used for) financing activities | |||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Increase (decrease) for the period | ( | ( | |||||||||
Balance at the beginning of the period | |||||||||||
Balance at the end of the period | $ | $ | |||||||||
Reconciliation of cash, cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included in prepaid expenses and other current assets | |||||||||||
Restricted cash included in other non-current assets | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ |
Class A Common Stock | Class B Common Stock | Capital in Excess of Par Value | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
Balance, January 1, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||
Net income (loss) | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net of conversions | ( | ( | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||
Cash dividends, $ | — | — | — | — | ( | — | ( | ||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | ||||||||||||||||||
Reclassification adjustment to net income (loss) | — | — | — | — | — | ||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||
Balance, January 1, 2021 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||
Net income (loss) | — | — | — | — | — | ||||||||||||||||||
Issuance of common stock, net of conversions | — | ( | — | — | — | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||
Cash dividends, $ | — | — | — | — | ( | — | ( | ||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | ( | ( | ||||||||||||||||
Reclassification adjustment to net income (loss) | — | — | — | — | — | ||||||||||||||||||
Balance, March 31, 2021 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||
Description | Balance Sheet Location | MARCH 31 2022 | DECEMBER 31 2021 | MARCH 31 2021 | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||
Current | Prepaid expenses and other current assets | $ | $ | $ | ||||||||||||||||||||||
Long-term | Other non-current assets | |||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||
Current | Prepaid expenses and other current assets | |||||||||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||
Current | Other current liabilities | $ | $ | $ | ||||||||||||||||||||||
Long-term | Other long-term liabilities | |||||||||||||||||||||||||
Foreign currency exchange contracts | ||||||||||||||||||||||||||
Current | Other current liabilities | |||||||||||||||||||||||||
$ | $ | $ |
MARCH 31 2022 | DECEMBER 31 2021 | MARCH 31 2021 | |||||||||||||||
Preferred stock, par value $ | |||||||||||||||||
Preferred stock authorized | |||||||||||||||||
Preferred stock outstanding | |||||||||||||||||
Class A Common stock, par value $ | |||||||||||||||||
Class A Common authorized | |||||||||||||||||
Class A Common issued(1)(2) | |||||||||||||||||
Treasury Stock | |||||||||||||||||
Class B Common stock, par value $ | |||||||||||||||||
Class B Common authorized | |||||||||||||||||
Class B Common issued(1) |
Foreign Currency | Deferred Gain (Loss) on Cash Flow Hedging | Pension Plan Adjustment | Total | ||||||||||||||||||||
Balance, January 1, 2022 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||||
Reclassification adjustment to net income (loss) | ( | ||||||||||||||||||||||
Tax effects | ( | ( | |||||||||||||||||||||
Balance, March 31, 2022 | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Balance, January 1, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Reclassification adjustment to net income (loss) | |||||||||||||||||||||||
Tax effects | ( | ( | ( | ( | |||||||||||||||||||
Balance, March 31, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
THREE MONTHS ENDED MARCH 31 | |||||||||||
2022 | 2021 | ||||||||||
Type of good or service: | |||||||||||
Consumer products | $ | $ | |||||||||
Commercial products | |||||||||||
Licensing | |||||||||||
Total revenues | $ | $ |
THREE MONTHS ENDED MARCH 31 | |||||||||||||||||||||||||||||||||||
Increase / (Decrease) | |||||||||||||||||||||||||||||||||||
2022 | % of Revenue | 2021 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||
Revenue | $ | 146,351 | 100.0 | % | $ | 149,249 | 100.0 | % | $ | (2,898) | (1.9) | % | |||||||||||||||||||||||
Cost of sales | 118,121 | 80.7 | % | 117,556 | 78.8 | % | 565 | 0.5 | % | ||||||||||||||||||||||||||
Gross profit | 28,230 | 19.3 | % | 31,693 | 21.2 | % | (3,463) | (10.9) | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 15,433 | 10.5 | % | 26,379 | 17.7 | % | (10,946) | (41.5) | % | ||||||||||||||||||||||||||
Amortization of intangible assets | 50 | — | % | 50 | — | % | — | — | % | ||||||||||||||||||||||||||
Operating profit (loss) | 12,747 | 8.7 | % | 5,264 | 3.5 | % | 7,483 | 142.2 | % | ||||||||||||||||||||||||||
Interest expense, net | 733 | 0.5 | % | 720 | 0.5 | % | 13 | 1.8 | % | ||||||||||||||||||||||||||
Other expense (income), net | 1,466 | 1.0 | % | 171 | 0.1 | % | 1,295 | 757.3 | % | ||||||||||||||||||||||||||
Income (loss) before income taxes | 10,548 | 7.2 | % | 4,373 | 2.9 | % | 6,175 | 141.2 | % | ||||||||||||||||||||||||||
Income tax expense (benefit) | 3,375 | 2.3 | % | 1,497 | 1.0 | % | 1,878 | 125.5 | % | ||||||||||||||||||||||||||
Net income (loss) | $ | 7,173 | 4.9 | % | $ | 2,876 | 1.9 | % | $ | 4,297 | 149.4 | % | |||||||||||||||||||||||
Effective income tax rate | 32.0 | % | 34.2 | % |
Revenue | |||||
2021 | $ | 149,249 | |||
Increase (decrease) from: | |||||
Unit volume and product mix | (12,268) | ||||
Foreign currency | (26) | ||||
Average sales price | 9,396 | ||||
2022 | $ | 146,351 |
THREE MONTHS ENDED MARCH 31 | |||||||||||
2022 | 2021 | ||||||||||
Net cash provided by (used for) operating activities | $ | (20,755) | $ | (1,889) | |||||||
Net cash provided by (used for) investing activities | $ | (406) | $ | (1,746) | |||||||
Net cash provided by (used for) financing activities | $ | 21,014 | $ | 2,693 |
Exhibit | ||||||||
Number* | Description of Exhibits | |||||||
31(i)(1) | ||||||||
31(i)(2) | ||||||||
32 | ||||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Hamilton Beach Brands Holding Company (Registrant) | ||||||||
Date: | May 4, 2022 | /s/ Michelle O. Mosier | ||||||
Michelle O. Mosier | ||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)/(Principal Accounting Officer) |
Date: | May 4, 2022 | /s/ Gregory H. Trepp | |||||||||
Gregory H. Trepp | |||||||||||
President and Chief Executive Officer (Principal Executive Officer) |
Date: | May 4, 2022 | /s/ Michelle O. Mosier | |||||||||
Michelle O. Mosier | |||||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)/(Principal Accounting Officer) |
Date: | May 4, 2022 | /s/ Gregory H. Trepp | |||||||||
Gregory H. Trepp | |||||||||||
President and Chief Executive Officer (Principal Executive Officer) | |||||||||||
Date: | May 4, 2022 | /s/ Michelle O. Mosier | |||||||||
Michelle O. Mosier | |||||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)/(Principal Accounting Officer) |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Income Statement [Abstract] | ||
Revenue | $ 146,351 | $ 149,249 |
Cost of sales | 118,121 | 117,556 |
Gross profit | 28,230 | 31,693 |
Selling, general and administrative expenses | 15,433 | 26,379 |
Amortization of intangible assets | 50 | 50 |
Operating profit (loss) | 12,747 | 5,264 |
Interest expense, net | 733 | 720 |
Other expense (income), net | 1,466 | 171 |
Income (loss) before income taxes | 10,548 | 4,373 |
Income tax expense (benefit) | 3,375 | 1,497 |
Net income (loss) | $ 7,173 | $ 2,876 |
Basic earnings (loss) per share (in dollars per share) | $ 0.51 | $ 0.21 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.51 | $ 0.21 |
Basic weighted average shares outstanding (in shares) | 14,061 | 13,855 |
Diluted weighted average shares outstanding (in shares) | 14,092 | 13,874 |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 7,173 | $ 2,876 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment | (1,190) | 678 |
(Loss) gain on long-term intra-entity foreign currency transactions | 1,458 | (1,033) |
Cash flow hedging activity | 2,053 | 164 |
Reclassification of foreign currency adjustments into earnings | 2,085 | 0 |
Reclassification of hedging activities into earnings | (97) | 125 |
Reclassification of pension adjustments into earnings | 25 | 113 |
Total other comprehensive income (loss), net of tax | 4,334 | 47 |
Comprehensive income (loss) | $ 11,507 | $ 2,923 |
Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends (in dollars per share) | $ 0.10 | $ 0.095 |
Basis of Presentation and Recently Issued Accounting Standards |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recently Issued Accounting Standards | Basis of Presentation and Recently Issued Accounting Standards Basis of Presentation Hamilton Beach Brands Holding Company operates through its wholly-owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”) (collectively “Hamilton Beach Holding” or the “Company”). HBB is a leading designer, marketer, and distributor of a wide range of branded, small electric household and specialty housewares appliances, as well as commercial products for restaurants, fast food chains, bars, and hotels. HBB operates in the consumer and commercial markets. The financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the remainder of the year due to the highly seasonal nature of the Company's primary markets. A majority of revenue and operating profit typically occurs in the second half of the calendar year when sales of products to retailers and consumers historically increase significantly for the fall holiday-selling season. Accounting Standards Not Yet Adopted The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or nonpublic entities, the Company can adopt the new or revised standard at the time nonpublic entities adopt the new or revised standard. We will lose our status as an emerging growth company as of December 31, 2022, the last day of the fiscal year following the fifth anniversary of our spin-off from NACCO Industries, Inc. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. For nonpublic entities, the amendments are currently effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 when required using the modified retrospective transition method applied on the effective date and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures. We are also evaluating our lease portfolio, the practical expedients and process and policy change requirements. The Company expects to record additional material assets and corresponding liabilities related to operating leases in the statement of financial position. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)," which requires an entity to recognize credit losses as an allowance rather than as a write-down. For nonpublic entities and smaller reporting companies, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is planning to adopt ASU 2016-03 for its year beginning January 1, 2023 and subsequent interim periods and is currently evaluating to what extent ASU 2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules will be effective for the Company for its year ending December 31, 2022. The Company is currently in the process of evaluating the impact of adoption of the new accounting rules on the Company’s financial condition, results of operations, cash flows and disclosures. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures. Assets Held for Sale During the fourth quarter of 2020, the Company committed to a plan to sell its Brazilian subsidiary and determined that it met all of the criteria to classify the assets and liabilities of this business as held for sale. In April 2021, the Company made the decision to wind down the Brazilian subsidiary and enter into a licensing agreement with a third party to service the Brazilian market. The carrying amounts of the assets were reclassified to held and used during the second quarter of 2021. During the first quarter of 2022, the criteria for substantially complete liquidation were met, and $2.1 million of accumulated other comprehensive losses were released into other expense (income), net in the consolidated results of operations for the three months ended March 31, 2022. Insurance Recovery In the first quarter of 2022, the Company recognized $10.0 million of insurance recovery associated with unauthorized transactions by former employees at our Mexican subsidiaries, which were identified in the quarter ended March 31, 2020. The Company maintains fidelity insurance and filed a claim, which was approved during the first quarter of 2022, to recover losses incurred up to the policy maximum of $10.0 million. The insurance recovery receivable is included in Prepaid expenses and other current assets in our Consolidated Balance Sheet as of March 31, 2022. The receivable is reflected in changes in Other assets within the operating activities in the Consolidated Statements of Cash Flows, and is recognized in Selling, general and administrative expenses in our Consolidated Statement of Operations for the three months ended March 31, 2022. The insurance recovery receivable was subsequently collected in April 2022.
|
Transfer of Financial Assets |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Transfers and Servicing [Abstract] | |
Transfer of Financial Assets | Transfer of Financial Assets The Company has entered into an arrangement with a financial institution to sell certain US trade receivables on a non-recourse basis. The Company utilizes this arrangement as an integral part of financing working capital. Under the terms of the agreement, the Company receives cash proceeds and retains no rights or interest and has no obligations with respect to the sold receivables. These transactions are accounted for as sold receivables which result in a reduction in trade receivables because the agreement transfers effective control over and risk related to the receivables to the buyer. Under this arrangement, the Company derecognized $27.6 million and $29.8 million of trade receivables during the three months ending March 31, 2022 and March 31, 2021, respectively, and $140.7 million during the year ending December 31, 2021. The loss incurred on sold receivables in the consolidated results of operations for the three months ended March 31, 2022 and 2021 was not material. The Company does not carry any servicing assets or liabilities. Cash proceeds from this arrangement are reflected as operating activities in the Consolidated Statements of Cash Flows. |
Fair Value Disclosure |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosure | Fair Value Disclosure The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:
The Company measures its derivatives at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. The Company uses a present value technique that incorporates the LIBOR swap curve, foreign currency spot rates and foreign currency forward rates to value its derivatives, including its interest rate swap agreements and foreign currency exchange contracts, and also incorporates the effect of its subsidiary and counterparty credit risk into the valuation. Other Fair Value Measurement Disclosures The carrying amounts of cash and cash equivalents, trade receivables and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair value of the revolving credit agreement, including book overdrafts, which approximate book value, was determined using current rates offered for similar obligations taking into account subsidiary credit risk, which is Level 2 as defined in the fair value hierarchy. There were no transfers into or out of Levels 1, 2, or 3 during the three months ended March 31, 2022.
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Capital Stock The following table sets forth the Company's authorized capital stock information:
(1) Class B Common converted to Class A Common were 131 and 8 shares during the three months ending March 31, 2022 and 2021, respectively. (2) The Company issued Class A Common of 168 and 172 shares during the three months ending March 31, 2022 and 2021, respectively. Accumulated Other Comprehensive Loss: The following table summarizes changes in accumulated other comprehensive loss by component and related tax effects for periods shown:
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, which includes an estimate for variable consideration. HBB’s warranty program to the consumer consists generally of an assurance-type limited warranty lasting for varying periods of up to ten years for electric appliances, with the majority of products having a warranty of to three years. There is no guarantee to the customer as HBB may repair or replace, at its option, those products returned under warranty. Accordingly, the Company determined that no separate performance obligation exists. HBB products are not sold with a general right of return. However, based on historical experience, a portion of products sold are estimated to be returned due to reasons such as product failure and excess inventory stocked by the customer, which, subject to certain terms and conditions, HBB will agree to accept. Product returns, customer programs and incentive offerings, including special pricing agreements, price competition, promotions, and other volume-based incentives are accounted for as variable consideration. A description of revenue sources and performance obligations for HBB are as follows: Consumer and Commercial product revenue Transactions with both consumer and commercial customers generally originate upon the receipt of a purchase order from the customer, which in some cases are governed by master sales agreements, specifying product(s) that the customer desires. Contracts for product revenue have an original duration of one year or less, and payment terms are generally standard and based on customer creditworthiness. Revenue from product sales is recognized at the point in time when control transfers to the customer, which is either when product is shipped from the Company's facility, or delivered to customers, depending on the shipping terms. The amount of revenue recognized varies primarily with price concessions and changes in returns. The Company offers price concessions to its customers for incentive offerings, special pricing agreements, price competition, promotions or other volume-based arrangements. The Company evaluated such agreements with its customers and determined returns and price concessions should be accounted for as variable consideration. Consumer product revenue consists of sales of small electric household and specialty housewares appliances to traditional brick and mortar and ecommerce retailers, distributors and directly to the end consumer. A majority of this revenue is in North America. Commercial product revenue consists of sales of products to restaurants, fast-food chains, bars and hotels. Approximately one-half of commercial sales are in the U.S. and the other half is in markets across the globe. License revenue From time to time, the Company enters into exclusive and non-exclusive licensing agreements which grant the right to use certain of HBB’s intellectual property ("IP") in connection with designing, manufacturing, distributing, advertising, promoting and selling the licensees’ products during the term of the agreement. The IP that is licensed generally consists of trademarks, trade names, patents, trade dress, and/or logos (the “Licensed IP”). In exchange for granting the right to use the Licensed IP, HBB receives a royalty payment, which is a function of (1) the total net sales of products that use the Licensed IP and (2) the royalty percentage that is stated in the licensing agreement. HBB recognizes revenue at the later of when the subsequent sales occur or satisfying the performance obligation (over time). The following table sets forth Company's revenue on a disaggregated basis for the three months ended March 31:
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Contingencies |
3 Months Ended |
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Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Hamilton Beach Brands Holdings Company and its subsidiaries are involved in various legal and regulatory proceedings and claims that have arisen in the ordinary course of business, including product liability, patent infringement, asbestos related claims, environmental and other claims. Although it is difficult to predict the ultimate outcome of these proceedings and claims, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, results of operation or cash flows of the Company. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. Proceedings and claims asserted against the Company or its subsidiaries are subject to inherent uncertainties and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the Company's financial position, results of operations and cash flows for the period in which the ruling occurs, or in future periods. Hamilton Beach Brands Holding Company (HBBHC) is a defendant in a legal proceeding instituted in February 2020 in which the plaintiff seeks to hold the Company liable for the unsatisfied portion of an agreed final judgment that plaintiff obtained against The Kitchen Collection, LLC ("KC") related to KC’s failure to continue to operate forty-nine stores during the term of the store leases. In February 2020, KC agreed to the entry of a final judgment in favor of the plaintiff in the amount of $8.1 million and in April 2020 the plaintiff received $0.3 million in the final distribution of KC assets to KC creditors. The Company believes that the plaintiff’s claims are without merit and will vigorously defend against plaintiff’s claims. Environmental matters HBB is investigating or remediating historical environmental contamination at some current and former sites operated by HBB or by businesses it acquired. Based on the current stage of the investigation or remediation at each known site, HBB estimates the total investigation and remediation costs and the period of assessment and remediation activity required for each site. The estimate of future investigation and remediation costs is primarily based on variables associated with site clean-up, including, but not limited to, physical characteristics of the site, the nature and extent of the contamination and applicable regulatory programs and remediation standards. No assessment can fully characterize all subsurface conditions at a site. There is no assurance that additional assessment and remediation efforts will not result in adjustments to estimated remediation costs or the time frame for remediation at these sites. HBB's estimates of investigation and remediation costs may change if it discovers contamination at additional sites or additional contamination at known sites, if the effectiveness of its current remediation efforts change, if applicable federal or state regulations change or if HBB's estimate of the time required to remediate the sites changes. HBB's revised estimates may differ materially from original estimates. At March 31, 2022, December 31, 2021, and March 31, 2021, HBB had accrued undiscounted obligations of $3.4 million, $3.4 million and $3.1 million respectively, for environmental investigation and remediation activities. HBB estimates that it is reasonably possible that it may incur additional expenses in the range of zero to $1.7 million related to the environmental investigation and remediation at these sites.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company's provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.The effective tax rate on income was 32.0% and 34.2% for the three months ended March 31, 2022 and 2021, respectively. The effective tax rate for the three months ended March 31, 2022 was unfavorably impacted by interest and penalties on unrecognized tax benefits and a valuation allowance on certain foreign deferred tax assets related to the Brazil liquidation as discrete expense items. The effective tax rate for 2021 was unfavorably impacted by interest and penalties on unrecognized tax benefits as a discrete expense item. |
Basis of Presentation and Recently Issued Accounting Standards (Policies) |
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Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Hamilton Beach Brands Holding Company operates through its wholly-owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”) (collectively “Hamilton Beach Holding” or the “Company”). HBB is a leading designer, marketer, and distributor of a wide range of branded, small electric household and specialty housewares appliances, as well as commercial products for restaurants, fast food chains, bars, and hotels. HBB operates in the consumer and commercial markets. The financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the remainder of the year due to the highly seasonal nature of the Company's primary markets. A majority of revenue and operating profit typically occurs in the second half of the calendar year when sales of products to retailers and consumers historically increase significantly for the fall holiday-selling season.
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Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or nonpublic entities, the Company can adopt the new or revised standard at the time nonpublic entities adopt the new or revised standard. We will lose our status as an emerging growth company as of December 31, 2022, the last day of the fiscal year following the fifth anniversary of our spin-off from NACCO Industries, Inc. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. For nonpublic entities, the amendments are currently effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 when required using the modified retrospective transition method applied on the effective date and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures. We are also evaluating our lease portfolio, the practical expedients and process and policy change requirements. The Company expects to record additional material assets and corresponding liabilities related to operating leases in the statement of financial position. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)," which requires an entity to recognize credit losses as an allowance rather than as a write-down. For nonpublic entities and smaller reporting companies, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is planning to adopt ASU 2016-03 for its year beginning January 1, 2023 and subsequent interim periods and is currently evaluating to what extent ASU 2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules will be effective for the Company for its year ending December 31, 2022. The Company is currently in the process of evaluating the impact of adoption of the new accounting rules on the Company’s financial condition, results of operations, cash flows and disclosures. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.
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Assets Held for Sale | Assets Held for SaleDuring the fourth quarter of 2020, the Company committed to a plan to sell its Brazilian subsidiary and determined that it met all of the criteria to classify the assets and liabilities of this business as held for sale. In April 2021, the Company made the decision to wind down the Brazilian subsidiary and enter into a licensing agreement with a third party to service the Brazilian market. The carrying amounts of the assets were reclassified to held and used during the second quarter of 2021. |
Fair Value Disclosure (Tables) |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Capital Stock | The following table sets forth the Company's authorized capital stock information:
(1) Class B Common converted to Class A Common were 131 and 8 shares during the three months ending March 31, 2022 and 2021, respectively. (2) The Company issued Class A Common of 168 and 172 shares during the three months ending March 31, 2022 and 2021, respectively.
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Schedule of Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss: The following table summarizes changes in accumulated other comprehensive loss by component and related tax effects for periods shown:
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table sets forth Company's revenue on a disaggregated basis for the three months ended March 31:
|
Basis of Presentation and Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Reclassification of foreign currency adjustments into earnings | $ 2,085 | $ 0 |
Insurance recoveries | 10,000 | |
Fidelity insurance, loss recovery, policy maximum | $ 10,000 |
Transfer of Financial Assets (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Transfers and Servicing [Abstract] | |||
Accounts receivable derecognized | $ 27.6 | $ 29.8 | $ 140.7 |
Fair Value Disclosure (Details) - Fair value measurements, recurring - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
---|---|---|---|
Assets: | |||
Assets at fair value | $ 2,056 | $ 73 | $ 0 |
Liabilities: | |||
Liabilities at fair value | 383 | 912 | 1,173 |
Prepaid expenses and other current assets | |||
Assets: | |||
Interest rate swap agreements | 400 | 0 | 0 |
Foreign currency exchange contracts | 0 | 73 | 0 |
Other non-current assets | |||
Assets: | |||
Interest rate swap agreements | 1,656 | 0 | 0 |
Other current liabilities | |||
Liabilities: | |||
Interest rate swap agreements | 0 | 216 | 333 |
Foreign currency exchange contracts | 383 | 41 | 249 |
Other long-term liabilities | |||
Liabilities: | |||
Interest rate swap agreements | $ 0 | $ 655 | $ 591 |
Contingencies (Details) |
1 Months Ended | ||||
---|---|---|---|---|---|
Apr. 30, 2020
USD ($)
|
Feb. 29, 2020
USD ($)
lease
|
Mar. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Mar. 31, 2021
USD ($)
|
|
Loss Contingencies [Line Items] | |||||
Number of leases allegedly breached | lease | 49 | ||||
Amount of final judgment | $ 8,100,000 | ||||
Amount awarded to plaintiff | $ 300,000 | ||||
Accrual for environmental investigation and remediation activities | $ 3,400,000 | $ 3,400,000 | $ 3,100,000 | ||
Minimum | |||||
Loss Contingencies [Line Items] | |||||
Estimate of additional expenses | 0 | ||||
Maximum | |||||
Loss Contingencies [Line Items] | |||||
Estimate of additional expenses | $ 1,700,000 |
Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, percent | 32.00% | 34.20% |
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