Hamilton Beach Brands Holding Company · NYSE:HBB
Hamilton Beach Brands — FY2017 Earnings Presentation
33 slides from Hamilton Beach Brands's earnings presentation, Apr 16, 2018
Slide 1: Everyday Good Thinking: Full Year 2017 Investor Presentation
EVERYDAY GOOD THINKING Full Year 2017 Investor Presentation Exhibit 99
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Hamilton Beach Bra
Slide 3: Hamilton Beach Brands Holding Company Snapshot
Hamilton Beach Brands Holding Company Snapshot Hamilton Beach Brands Holding Company (NYSE: HBB) Hamilton Beach Brands Holding Company (“HBBHC”) is a holding company for two separate businesses: consumer and commercial small appliances (“Hamilton Beach Brands” or “HBB”) and specialty retail (“The Ki
Slide 4: Proven Business Model Drives Results
Proven Business Model Drives Results #1 Presence in Key Retail and Commercial Sales Channels Trusted, Efficient and Low-Cost Supply Chain Global Platform Experienced Management Team Strong Performance and Return on Capital Iconic Brands Consistent, Market Leading Innovation
Slide 5: The Innovation Started Over Years Ago!
The Innovation Started Over 115 Years Ago!
Slide 6: Iconic Brands and Innovative Products
Iconic Brands and Innovative Products _____________________ * Wolf Gourmet ® is a registered trademark of the Sub-Zero Group, Inc. ** CHI ® is a registered trademark of Farouk Systems, Inc. Trusted Proven Reliable Innovative CONSUMER COMMERCIAL RETAIL
Slide 7: Company Overview
Company Overview KEY BUSINESS HIGHLIGHTS Leading designer, marketer and distributor of branded housewares for retail and commercial applications Strong brands with leading market share Hamilton Beach ® brand ranked #1 small kitchen appliance brand in U.S. (based on units) in 2017 Strong HBB share in
Slide 8: Our Mission Our Values
Our Mission Our Values Deliver profitable growth from innovative solutions that improve everyday living Customer Obsession: Consistently meet or exceed the needs of our internal and external customers People: Employ and develop the best Good Thinking: Encourage and cultivate inspired thinking in all
Slide 9: Slide 9
Slide 10: Comprehensive Product Portfolio
Comprehensive Product Portfolio Coffee Makers Kettles Toasters Irons Slow Cookers Hand Mixers Can Openers Blenders Toaster Ovens Meat Grinders Food Processors
Slide 11: Strong Portfolio of Branded Products
Strong Portfolio of Branded Products _____________________ Source: NPD point of sales data for the 12-month period ending December 2017 (1) NPD point of sales data for the 12-month period ending June HAMILTON BEACH BRANDS HAS A TOP 3 BRAND SHARE IN 29 OF THE 50 HOUSEWARES CATEGORIES Breadmaker Hand
Slide 12: Consistent Innovation in New Product Development
Consistent Innovation in New Product Development HBB aggregated data from 37,000 consumers in 2017 to introduce new, research-driven products HBB generated more than 27% of its revenue in the last 3 years from products that are less than 3 years old _____________________ (1) Excludes product introdu
Slide 13: Broad Customer Base Across Diverse Channels
SPECIALTY RETAILERS DEPARTMENT STORES WAREHOUSE CLUBS MASS MARKET RETAILERS E-COMMERCE RETAILERS Broad Customer Base Across Diverse Channels HBB U.S. SALES BY CHANNEL HBB Believes it Has the #1 Unit Share of Small Kitchen Appliances at the Top 2 U.S. E-Commerce Retailers HBB Has a Diverse Base of 2,
Slide 14: Global Infrastructure to Support HBB Objectives
Global Infrastructure to Support HBB Objectives Picton, Ontario Distribution Center Strategically located footprint to efficiently serve customers globally Markham, Ontario Canada Sales and Administration Headquarters Bentonville, Arkansas Sales Office Richmond, Virginia Corporate Headquarters Sales
Slide 15: Tangible Growth Opportunities to Generate Attractive Returns
Tangible Growth Opportunities to Generate Attractive Returns Long-Term HBB Objectives (excludes KC): Sales: Operating Profit Margin: $750M – $1B 9% – 10% Adjacent Categories E-Commerce leadership Premium Product Offerings Commercial Product Line Expansion Strategic Acquisitions International Market
Slide 16: Success in Growing E-Commerce Channel
Brand Rating Total Reviews 2017 Average Star RECENT ONLINE REVIEWS Success in Growing E-Commerce Channel GLOBAL E-COMMERCE FOOTPRINT Online sales of housewares is the fastest growing segment and accounted for 25% of HBB U.S. sales in 2017 Consumers are more discriminating of products due to their ab
Slide 17: Multi-Initiative Marketing Strategy
Multi-Initiative Marketing Strategy HBB delivers over 3.6 billion brand touchpoints annually through its marketing strategy Advertising Brand Websites E-mail Marketing Influencer Marketing Everyday Good Thinking Blog Facebook Twitter Pinterest Instagram YouTube Web visits 16,500+ followers 543,000+
Slide 18: Premium Product Market Opportunity
Premium Product Market Opportunity Well-positioned to grow in the premium market Leverage brand strength, engineering, design capabilities and commercial expertise to expand premium product offering Expansion of Hamilton Beach ® Professional and Weston ® brand product lines Robust roadmap of new pro
Slide 19: International expansion
United States 77% International 23% Asia-Pacific 45% Europe 21% North America 24% Rest of World 10% Expand internationally in the emerging Asia and Latin America markets and continue to expand in Canada and Mexico Target to increase HBB international sales to 35% to 45% of total HBB sales by concent
Slide 20: Commercial Market Opportunity
Commercial Market Opportunity Opportunity to accelerate growth in the $18 billion global commercial market (1) Food service markets benefiting from changing demographics and shift to healthier food options Increase in onsite food preparation driving demand for commercial appliances Company’s commerc
Slide 21: Expand into New Small Appliance and Adjacent Categories
Expand into New Small Appliance and Adjacent Categories Pursuing opportunities to grow outside of the small kitchen appliance category Significant opportunity to expand outside the small kitchen appliances category Leverage existing infrastructure and channels to introduce adjacent products E-commer
Slide 22: Acquisition Growth Strategy
Acquisition Growth Strategy Large, global housewares market that is highly fragmented Competitive market position that gives HBB potential to increase share / enter new product categories Opportunity in current consumer space, new consumer categories or commercial Strong brand and / or channel prese
Slide 23: The Kitchen Collection Strategy
The Kitchen Collection Strategy 210 stores as of December 31, 2017 strategically located primarily in outlet malls across the U.S. Meet the challenge of a difficult environment and evolve aggressively in a constructive manner, focusing on the outlet mall segment Outlet malls have a sustainable prese
Slide 24: Consolidated Financial Overview
Consolidated Financial Overview
Slide 25: Historical Financial Highlights
REVENUE Historical Financial Highlights ($ in millions) $621.0 $605.2 $615.1 EBITDA $38.0 $46.9 $45.4 $151.0 $144.4 $128.5 _____________________ (1) EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures. The discussion of non-GAAP measures and th
Slide 26: Capital Structure and Return on Capital
(2) (2) (3) Consolidated Debt / EBITDA 1.4x 0.8x 1.2x Net Debt / EBITDA 1.0x 0.6x 0.9x Debt to Total Capitalization 41.3% 37.3% 50.1% Capital Structure and Return on Capital FLEXIBLE CAPITAL STRUCTURE (HBBHC) 19.1% 30.5% 29.7% ADJUSTED ROTCE (HBB) _____________________ (1) Adjusted income, EBITDA, N
Slide 27: Company Outlook
Company Outlook KC OUTLOOK HBB OUTLOOK U.S. consumer retail market for small kitchen appliances grew modestly in 2017 and is expected to grow modestly in 2018 compared with 2017. International and commercial markets are expected to continue to grow modestly. HBB will continue to focus on strengtheni
Slide 28: Key Investment Highlights
Key Investment Highlights Multi-Layered Growth Strategy Increase in Premium Product Offerings Continued International Expansion Further Penetration of Commercial Markets Expansion into Adjacent Markets Complete Accretive Acquisitions Business Growth will Drive Further Economies of Scale Strong Core
Slide 29: Appendix
Appendix
Slide 30: Non-GAAP Disclosure
Non-GAAP Disclosure This presentation contains non-GAAP financial measures. Included in this presentation are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").
Slide 31: Non-GAAP EBITDA Reconciliation
Non-GAAP EBITDA Reconciliation ($ in millions) Note: EBITDA is provided solely as a supplemental disclosure. EBITDA does not represent net income, as defined by U.S. GAAP and should not be considered as a substitute for net income, or as an indicator of operating performance. The Company defines EBI
Slide 32: HBBHC Equity, Net Income and Capitalization Reconciliation
Adjusted Consolidated Equity $82.9 $65.1 $51.1 Adjusted Income $19.7 $26.2 $22.6 Total Capitalization $141.3 $103.8 $102.4 Debt to Total Capitalization 41.3% 37.3% 50.1% HBBHC Equity, Net Income and Capitalization Reconciliation ($ in millions) EQUITY (HBBHC) NET INCOME (HBBHC) (1)(2) ______________
Slide 33: HBB ROTCE and Net Income Reconciliation
HBB Adjusted Income $19.7 $26.6 $25.2 Actual return on capital employed percentage 19.1% Actual return on capital employed percentage 30.5% Actual return on capital employed percentage 29.7% HBB ROTCE and Net Income Reconciliation ($ in millions) ADJUSTED ROTCE (HBB) (1) ____________________ (1) Adj
Hamilton Beach Brands Holding — FY2017 Earnings Presentation on 6ix