Hamilton Beach Brands Holding Company · NYSE:HBB
Hamilton Beach Brands — Investor Presentation (October 2017)
38 slides from Hamilton Beach Brands's investor presentation, Oct 2, 2017
Slide 1: Investor Presentation
Exhibit 99 Investor Presentation September 2017
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following information includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any and all statements regarding the Company’s expected position,future
Slide 3: Management Presenters
Management Presenters GREGTREPP JIMTAYLOR President & CEO Vice President & CFO 21 years with Hamilton Beach Brands 34 years with Hamilton Beach Brands Previously employed with Pepperidge Farm Previously employed with Price Waterhouse Inc. and Young & Rubicam SCOTTTIDEY Sr. Vice President, North Amer
Slide 4: HBBHC Snapshot
HBBHC 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 Kitchen Collection” or “KC”) Hamil
Slide 5: Transaction Background and Rationale
Transaction Background and Rationale
Slide 6: Spin-Off Transaction Summary
Spin-Off Transaction Summary NACCO Industries, Inc. (“NACCO”) is planning to effect a stock spin-off of Hamilton Beach Brands Holding Company Distributing Company………………........................................................................................NACCO Industries, Inc. (NYSE: NC) Distribute
Slide 7: Spin-Off Rationale
Spin-Off Rationale The spin-off is expected to accomplish important business objectives for HBBHC Focused Housewares Investment Provides investors with a more focused, single-industry investment option Improve Flexibility to Pursue Growth Create greater flexibility to pursue strategic growth opportu
Slide 8: HBBHC Overview and Strategic Objectives
HBBHC Overview and Strategic Objectives
Slide 9: Proven Business Model Drives Results
Proven Business Model Drives Results + Iconic Brands + Experienced Management Team Consistent, + Market Leading Innovation Strong Performance and + #1 Presence in Key Sales Channels Return on Capital + Global Platform + Low-Cost Supply Chain Trusted, Efficient and 6
Slide 10: The Innovation Started Over 110 Years Ago!
The Innovation Started Over 110 Years Ago! 7
Slide 11: HBBHC is a Collection of Iconic Consumer Product Brands
HBBHC is a Collection of Iconic Consumer Product Brands CONSUMER COMMERCIAL RETAIL (1) (2) Trusted Proven Reliable Innovative _____________________ (1) WolfGourmet® is a registeredtrademarkof theSub-ZeroGroup,Inc. (2) CHI® is a registeredtrademarkof FaroukSystems,Inc. 8
Slide 12: HBBHC Overview
HBBHC Overview KEY BUSINESS HIGHLIGHTS 2016 FINANCIAL HIGHLIGHTS Leading designer, marketer and distributor of branded housewares for retail and commercial applications Consumer Commercial Strong brands with leading market share 75% 6% SALES BY Hamilton Beach ® brand ranked #1 small kitchen applianc
Slide 13: Our Core Principles
Our Core Principles Our Vision To be the leading global supplier of branded small appliances and housewares Our MissionProfitable growthfrominnovative solutionsthatimproveeverydayliving The Customer: Consistently meet or exceed the needs of our internal and external customers People: Employ and deve
Slide 14: "Good Thinking" Approach
“Good Thinking” Approach Consumer Innovation Focus Excellent Work Quality Environment At Hamilton Beach Brands, We Practice “Good Thinking” Testing, Testing, Work Smart Testing Best-in-Class Trusted, Ethical Logistics 11
Slide 15: Comprehensive Product Portfolio
Comprehensive Product Portfolio Coffee Makers Blenders Slow Cookers Irons Toaster Ovens Kettles Toasters Food Processors Can Openers Hand Mixers Meat Grinders 12
Slide 16: Strong Portfolio of Branded Products
Strong Portfolio of Branded Products TOTAL PRODUCT CATEGORIES OFFERED 47 40 33 30 28 23 18 16 Cuisinart Oster Black & Decker Breville Kitchen Aid Sunbeam _____________________ Source: NPD for the 12-month period ending August, 2017. HBB HAS A TOP 3 BRAND IN 28 KEY HOUSEWARE CATEGORIES Air purifiers
Slide 17: Consistent Innovation in New Product Development
Consistent Innovation in New Product Development HBB aggregates data from 25,000+ consumers annually to introduce new, research-driven products PRODUCT PLATFORM INTRODUCTIONS (1) SELECT 2017 PRODUCT INTRODUCTIONS HBB generated more than 30% of its revenue in the last 3 years from products that are l
Slide 18: Broad Customer Base Across Diverse Channels
Broad Customer Base Across Diverse Channels MASS MARKET RETAILERSE-COMMERCE RETAILERSDEPARTMENT STORES WAREHOUSE CLUBS GrupoExito JD.COM Bodega Aurrera Bemol El Palacio de Hierro Costco PRICESMART Amazon Family Dollar JET Harrods KOHL’S Sam’s Club TARGET Walmart TMALL.COM Wayfair Macy’s Liverpool SP
Slide 19: Global Infrastructure to Support HBB Objectives
Global Infrastructure to Support HBB Objectives Strategically located footprint to efficiently serve customers globally Corporate HQ Distribution Sales and Administrative HQ Sales Picton, Ontario Distribution Minneapolis, Markham, Ontario Center Minnesota Canada Sales and Sales Office Administration
Slide 20: Market Backdrop Summary
Market Backdrop Summary INDUSTRY GEOGRAPHIC FOOTPRINT CHANNEL OVERVIEW ROW 19% E-Commerce ~$30 B 25% CONSUMER Asia-Pacific KITCHEN 43% 2017E U.S. United States APPLIANCE ~$71 B HOUSEWARES 14% ~$23 B MARKET BY SALES BY (2) GEOGRAPHY(1) CHANNEL Other 75% Europe 24% ~$39 B _____________________ (1) Mar
Slide 21: Tangible Growth Opportunities to Generate Attractive Returns
Tangible Growth Opportunities to Generate Attractive Returns E-Commerce leadership Premium Product Offerings International Market Penetration Commercial Product Line Expansion Adjacent Categories Strategic Acquisitions Long-Term HBB Objectives (excludes KC): Sales: $750M –$1B Operating Profit Margin
Slide 22: Success in Growing E-Commerce Channel
Success in Growing E-Commerce Channel GLOBAL E-COMMERCE FOOTPRINT RECENT ONLINE REVIEWS Online sales of housewares is the fastest growing segment and is Brand 2016 Average Star Total Reviews expected to account for 25% of U.S. industry sales in 2017 4.1 189,137 Consumers are more discriminating of p
Slide 23: Multi-Initiative Marketing Strategy
Multi-Initiative Marketing Strategy HBB delivers 3 billion+ impressions annually through its marketing strategy Advertising Online E-mail 17,000+ followers Everyday Good Thinking Blog Facebook Pinterest 500,000+ followers Twitter Instagram 8,000+ followers YouTube 1,500+ subscribers 20
Slide 24: Premium Product Market Opportunity
Premium Product Market Opportunity Expand placements and share in the “Only-the-Best” high-end market with strong brands and product lines ® Well-positioned to grow in the premium market Leverage brand strength, engineering, design capabilities and commercial expertise to expand premium product offe
Slide 25: International Market Opportunity
International Market Opportunity Significant expansion opportunity for international growth ROW 19% Expand internationally in the emerging Asia and Latin $30.4 B America markets and continue to expand in Canada and Mexico CONSUMER KITCHEN Target to increase international sales by concentrating on Un
Slide 26: Commercial Market Opportunity
Commercial Market Opportunity Commercial grade, innovative features, strong Dependable value, commercially rated, strong performance and heavy-duty durability performance and durability Opportunity toaccelerate market(1) growthinthe$18billionglobalcommercial Food service markets benefitting from cha
Slide 27: Expand into New Small Appliance and Adjacent Categories
Expand into New Small Appliance and Adjacent Categories Pursuing opportunities to grow outside of the small kitchen appliance category Compact Commercial Buffet Servers Coffee Airpots Kitchen Scales Refrigerators Chamber Sealers Significant opportunity to expand outside the small kitchen appliances
Slide 28: Acquisition Growth Strategy
Acquisition Growth Strategy Product expansion opportunity within existing product categories and beyond HBB’s small kitchen and commercial appliance business ATTRACTIVE MARKETS Large, global housewares market that is highly fragmented TARGET PROFILE Competitive market position that gives HBB potenti
Slide 29: The Kitchen Collection Strategy
The Kitchen Collection Strategy 209 stores as of June 30, 2017 strategically located primarily in outlet malls across the U.S. Meet the challenge of a difficult environment and evolve aggressively in a constructive manner, focusing on the outlet mall segment Outlet malls have a sustainable presence
Slide 30: Consolidated Financial Overview
Consolidated Financial Overview
Slide 31: Historical Financial Highlights
Historical Financial Highlights REVENUE EBITDA(1) ($ in millions) ($ in millions) $621.0 $605.2 $604.1 $38.0 $46.9 $49.0 2015 2016 LTM June 2017 2015 2016 LTM June 2017 % of Revenue: 6.1% 7.7% 8.1% $151.0 $144.4 $139.9 $1.6 $1.9 $1.3 2015 2016 LTM June 2017 2015 2016 LTM June 2017 % of Revenue: 1.1%
Slide 32: Capital Structure and Return on Capital
Capital Structure and Return on Capital (3) FLEXIBLE CAPITAL STRUCTURE (HBBHC) ATTRACTIVE ROTCE (HBB) (1) 2015 2016 June 2017 33.4% Net Income $19.7 $26.2 $27.2 30.5% (3) EBITDA 40.3 48.8 50.4 Cash and Cash Equivalents 16.8 11.3 5.3 Consolidated Debt 58.4 38.7 54.3 19.1% Net Debt 41.6 27.4 49.0 (2)
Slide 33: Company Outlook
Company Outlook HBB OUTLOOK KC OUTLOOK U.S. and Canadian consumer markets for small appliances during H2 2017Declining consumer traffic to physical retail locations and reduced in-store expected to be comparable to H2 2016, as sales continue to shift from in- transactions are reducing KC’s target co
Slide 34: Key Investment Highlights
Key Investment Highlights Strong Core Business Model Multi-Layered Growth Strategy Leading Global Market Share in Branded Housewares E-Commerce Leadership Iconic Brands Known Globally Increase in Premium Product Offerings Comprehensive Product Offering Continued International Expansion Broad Custome
Slide 35: Appendix
— ~~ Hamilton Beach BRANDS ait nite 1 Appendix
Slide 36: Non-GAAP Disclosure
Non-GAAP Disclosure This presentation contains non-GAAP financial measures. Included in this presentation are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").
Slide 37: Non-GAAP EBITDA Reconciliation
Non-GAAP EBITDA Reconciliation ($ in millions) Year Ended December 31, 2015 2016 LTM June 2017 Calculation of EBITDA Net income $19.7 $26.6 $27.8 Income tax provision 11.8 14.5 15.3 Interest expense 1.8 1.1 1.2 Interest income (0.1) 0.0 (0.0) Depreciation and amortization expense 4.8 4.7 4.7 EBITDA
Slide 38: Capitalization and ROTCE Reconciliation
Capitalization and ROTCE Reconciliation ($ in millions) (1) CAPITALIZATION (HBBHC) ROTCE (HBB) 2015 2015 2016 June 2017 Average Equity (12/31/2014 and each of 2015's quarter ends) $51.5 Average Debt (12/31/2014 and each of 2015's quarter ends) 58.9 Average Cash (12/31/2014 and each of 2015's quarter
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