Hamilton Beach Brands Holding Company · NYSE:HBB
Hamilton Beach Brands — Baird's 2018 Global Consumer, Technology & Services Conference
36 slides from Hamilton Beach Brands's conference presentation, Jun 6, 2018
Slide 1: Hamilton Beach Brands Holding Company - Baird Conference
—_—_ => Hamilton Beach BRANDS | WESTON HAMILTON BEACH BRANDS HOLDING COMPANY Baird Conference - June 6, 2018 Greg Trepp Jim Taylor President and CEO VP, CFO and Treasurer
Slide 2: Safe Harbor Statement
Safe Harbor Statement On the Cover: Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc. CHI® is a registered trademark of Farouk Systems, Inc. 1
Slide 3: Who We Are
WHO WE ARE Hamilton Beach Brands Holding Company was spun off from NACCO Industries on September 29, 2017 NYSE: HBB A holding company for two separate businesses: Hamilton Beach Brands - A leading global designer, marketer and distributor of branded small electric household and specialty housewares
Slide 4: 2017 HBBHC Revenues $740.7M
2017 HBBHC REVENUES $740.7M (1) Adjusted income and EBITDA are non-GAAP measures and should not be considered in isolation or as a substitute for GAAP measures. The discussion of non-GAAP measures and the related reconciliations to GAAP measures are found in the Appendix . These non-GAAP measures ha
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS 4
Slide 6: Comprehensive Coverage
COMPREHENSIVE COVERAGE Brands, Price Points and Categories Luxury . ° ® PRICE HamiulttonBeach COVERAGE ¢ PROFESSIONAL Hamilton | WESTON Beach. Value | Proctor Silex. ) Coffee Fondue Set #1S rank #50+ S$ rank CATEGORY COVERAGE 5
Slide 7: Focus on Innovation
FOCUS ON INNOVATION _____________________ (1) Excludes product introductions from The Kitchen Collection and gadget introductions from Weston. 6
Slide 8: FlexBrew
FLEXBREW © 2 WAYS OF BREWING SINGLE CUP OR FULL POT BREW GROUNDS OR SINGLE SERVE PACKS
Slide 9: Easy-Reach Toaster Oven
EASY-REACH™ TOASTER OVEN EASY ACCESS TO FOOD EASY ACCESS TO COUNTERTOP
Slide 10: Global Infrastructure
GLOBAL INFRASTRUCTURE Strategically Located Footprint to Serve Customers Seattle, Washington Sales Office Bentonville, Markham, Ontario Canada Sales and Picton, Administration Ontario Minneapolis, Headquarters. Distribution Minnesota Center Sales Office Richmond, Virginia IK Corporate HO A Regional
Slide 11: Growth Plan
GROWTH PLAN Long-Term Growth Plan (excludes KC): $750 M - $1 B in Revenue at 9% - 10% Operating Profit “ONLY THE BEST” EXPANSION STRATEGIC GLOBAL ACQUISITIONS E-COMMERCE — ~~» Hamilton Beach CATEGORY & GLOBAL CHANNEL COMMERCIAL EXPANSION LEADERSHIP INTERNATIONAL MARKET GROWTH
Slide 12: Strategic Initiatives
STRATEGIC INITIATIVES $1B 11
Slide 13: Only-the-Best
ONLY-THE-BEST Increasing Share in High-End Market with Premium Brands 2016 2017 Approximately 1/3 of Small Kitchen Appliance Industry Dollars is in Only-the-Best segment
Slide 14: Continued Investment
CONTINUED INVESTMENT Move .URM E NEW AUTOMATIC DRIP COFFEE MAKER PRECISION TECHNOLOGY FOR SUPERIOR TASTING COFFEE " Scale to ensure exact cotfee level every time " Precise water temperature and brew time = 5 Brew strength levels 13
Slide 15: Strategic Initiatives
STRATEGIC INITIATIVES $1B 14
Slide 16: E-Commerce
E-COMMERCE A Key Driver of HBB’s Success E-commerce 25% m Online sales of housewares is the fastest growing segment and accounted for 25% of HBB U.S. sales in 2017 m E-commerce rewards brands, 2017 HBB innovation and product quality above SALES BY and beyond traditional brick-and- CHANNEL mortar ret
Slide 17: E-Commerce
E-COMMERCE _____________________ (1) NPD point of sales data for the 12-month period ending December 2017. Source: Star Ratings are based on multiple online platforms, including Amazon.com, through April 2018. 16
Slide 18: Strategic Initiatives
STRATEGIC INITIATIVES $1B 17
Slide 19: Commercial Market
COMMERCIAL MARKET _____________________ (1) Company estimate. 18
Slide 20: New Commercial HBB Segments
NEW COMMERCIAL HBB SEGMENTS 19
Slide 21: Strategic Initiatives
STRATEGIC INITIATIVES $1B 20
Slide 22: International Markets
INTERNATIONAL MARKETS ► ► _____________________ (1) Source: Euromonitor International. 21
Slide 23: Strategic Initiatives
STRATEGIC INITIATIVES “ONLY THE BEST” EXPANSION STRATEGIC. ACQUISITIONS Hamilton Beach CATEGORY & CHANNEL EXPANSION INTERNATIONAL MARKET GROWTH GLOBAL E-COMMERCE GLOBAL COMMERCIAL LEADERSHIP 22
Slide 24: New Retail Categories
NEW RETAIL CATEGORIES Leveraging our Sourcing, Marketing, E-Commerce Strength Drying Racks Laundry Sorters lroning Boards
Slide 25: Strategic Initiatives
STRATEGIC INITIATIVES “ONLY THE BEST” EXPANSION STRATEGIC GLOBAL ACQUISITIONS E-COMMERCE SIB CATEGORY & GLOBAL CHANNEL COMMERCIAL EXPANSION LEADERSHIP INTERNATIONAL MARKET GROWTH 24
Slide 26: Acquisition Strategy
ACQUISITION STRATEGY 25 21
Slide 27: Kitchen Collection
KITCHEN COLLECTION Positioning to Deliver Acceptable Financial Return Focus on comparable store sales growth Wea * Working to enhance sales volume by continued refinement ~ of product offerings, merchandise mix and store displays» and appearance. Continued focus on gross margin and cash flow " Empha
Slide 28: Strong Cash Flow
STRONG CASH FLOW Provides Financial Flexibility S103M 32" CASH FLOW ® Reinvest in Core Growth BE FORE F NANCI NG 7 ence to Shareholders GE N E RATE D OVE R 7 Share Repurchases PAST 3 YEARS m Pay Down Debt = Accretive Acquisitions - Strategic Fit at the Right Price 27
Slide 29: Appendix
-— a, Hamilton Beach BRANDS
Slide 30: Historical Financial Highlights
HISTORICAL FINANCIAL HIGHLIGHTS REVENUE EBITDA (1) ($ in millions) ($ in millions) $621.0 $605.2 $615.1 $38.0 $46.9 $45.4 2015 2016 2017 2015 2016 2017 % of Revenue: 6.1% 7.7% 7.4% $151.0 $144.4 $128.5 $1.6 $1.9 $(1.9) 2015 2016 2017 2015 2016 2017 % of Revenue: 1.1% 1.3% (1.5)% $767.9 $745.4 $740.7
Slide 31: Capital Structure and Return on Capital
CAPITAL STRUCTURE AND RETURN ON CAPITAL (1) (In millions) (2) (2) (3) _____________________ (1) Adjusted income, EBITDA, Net Debt, Adjusted Consolidated Equity, and Adjusted ROTCE are non-GAAP measures and should not be considered in isolation or as a substitute for GAAP measures. The discussion of
Slide 32: Non-GAAP Disclosure
NON-GAAP DISCLOSURE This presentation contains non-GAAP financial measures. Included in this presentation are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").
Slide 33: Non-GAAP EBITDA Reconciliation
NON-GAAP EBITDA RECONCILIATION ($ in millions) Year Ended December 31, 2015 2016 2017 Calculation of EBITDA Net income $19.7 $26.6 $21.1 Income tax provision 11.8 14.5 18.6 Interest expense 1.8 1.1 1.6 Interest income (0.1) 0.0 (0.0) Depreciation and amortization expense 4.8 4.7 4.1 EBITDA $38.0 $46
Slide 34: HBBHC Equity, Net Income and Capitalization Reconciliation
HBBHC EQUITY, NET INCOME AND CAPITALIZATION RECONCILIATION ($ in millions) (1)(2) (1)(2) EQUITY (HBBHC) NET INCOME (HBBHC) 2015 2016 2017 2015 2016 2017 Consolidated Equity, as reported $82.9 $65.1 $46.4 Net Income, as reported $19.7 $26.2 $17.9 U.S. Tax Reform Impact - - 4.7 U.S. Tax Reform Impact
Slide 35: HBB ROTCE and Net Income Reconciliation
HBB ROTCE AND NET INCOME RECONCILIATION ($ in millions) ADJUSTED ROTCE (HBB) (1) NET INCOME (HBB) (3) 2015 Average Equity (12/31/2014 and each of 2015's quarter ends) $51.5 2015 2016 2017 Average Debt (12/31/2014 and each of 2015's quarter ends) 58.9 Average Cash (12/31/2014 and each of 2015's quart
Slide 36: Hamilton Beach Brands
- a, Hamiulton Beach BRANDS