MIDWEST IDEAS VIRTUAL INVESTOR CONFERENCE AUGUST 26-27, 2020
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MIDWEST IDEAS VIRTUAL INVESTOR CONFERENCE
AUGUST 26-27, 2020
SAFE HARBOR STATEMENT This presentation and any Q&A to follow may include forward- looking statements. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements. Past performance may not be representative of future results. The Company undertakes no obligation to publicly revise these forward- looking statements to reflect events or circumstances that may arise. Risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K. Cover Registered Trademarks: Wolf Gourmet® Sub-Zero Group, Inc. CHI® Farouk Systems, Inc. Bartesian® the Bartesian company.
WHO WE ARE
Leading Provider of Small Kitchen and Household Appliances
Hamilton Beach Brands (HBB)
Hamilton Beach Brands
A leading designer, marketer and distributor of a wide
Holding Company range of branded small electric household and
specialty housewares appliances, as well as
(HBBHC) was spun off from commercial products for restaurants, fast food chains,
NACCO Industries as a standalone public bars and hotels.
company in September 2017
and listed on the NYSE: HBB The Kitchen Collection (KC)
HBBHC exited the Kitchen Collection business with
the closure of its retail stores as of 12/31/2019. The
dissolution occurred April 3, 2020. KC’s losses and
Subsidiaries at the time of spin-off included negative cash flow are behind us. We look forward to
HBB and KC. seeing the benefit in our market value over time.
Our focus is now on our HBB business and its strategic priorities of
revenue growth, margin expansion and strong cash flow generation. 3
OUR CORE PRINCIPLES
Our Vision
To be the leading supplier CUSTOMER PEOPLE GOOD THINKING PASSION FOR
OBSESSION Employ and develop Encourage and cultivate QUALITY
of retail and commercial Consistently meet or the best inspired thinking in all Ensure the quality of our
small appliances exceed the needs of areas of our business products and services is
our internal and best in class
external customers
Our Mission
Deliver profitable growth
from innovative solutions EMBRACE TEAMWORK OUR ENVIRONMENTAND OUR ETHICS
CHANGE Help each other to COMMUNITY Honest, ethical
that improve everyday There is always a succeed. We believe diversity and inclusion behavior – always
living better way. We share both successes make us stronger and better
Change is and failures, we Productively manage our business in
accelerating communicate, we move as a sustainable, socially and
one environmentally responsible manner.
4
INVESTMENT HIGHLIGHTS
Proven Business Model Drives Results
▪ Commitment to Building Long-Term Shareholder Value
▪ Experienced Team Focused on Customers and Consumers
▪ Strong Portfolio of Iconic Brands with Leading Market Share
▪ Comprehensive Product Offering: Value to Luxury, 50+ Categories, Top 3 Share in 30+
▪ Focus on Innovation: 100+ Years of Creating Consumer-Driven New Products
▪ Hamilton Beach #1 Brand in Brick-and-Mortar and Ecommerce Channels in Units Sold
▪ Broad Customer Base and Leading Provider to the Growing Ecommerce Market
▪ Global Infrastructure, Efficient Supply Chain, Asset Light
▪ Six Strategic Initiatives to Drive Long-Term Revenue Growth, Margin Expansion
▪ Historically Strong Cash Flows and Financial Flexibility
5
5
COMPREHENSIVE PORTFOLIO: ICONIC BRANDS
50+ Categories, All Price Points
LUXURY
VALUE
Price Coverage
Fondue Set
Coffee
#50+
#1 Category Coverage
6
HAMILTON BEACH® IS THE #1 BRAND
Hamilton Beach Brands Drive Retailer Traffic in Stores and Online
% UNIT SHARE
U.S. SMALL KITCHEN ELECTRICS
Hamilton Beach® is ranked the #1
small kitchen appliance brand in the US,
in brick-and-mortar and ecommerce channels,
based on units sold
11.6 9.4 5.7 4.7 4.7 4.6 4.2 3.4 2.8
Hamilton Black + Decker Oster Cuisinart Ninja Mr. Coffee Keurig Instant Pot Crock Pot
Beach
7 Source: NPD POS database SKA + Garment Care 12 months ending 06/30/2020
HBB TOP 3 SHARE IN 31 CATEGORIES
Air Fryers Espresso Maker Pizza Ovens
Blending (Traditional) Food Processor Popcorn Makers
Blending (Single Serve) Food Chopper Rice Cooker
Other Blending & Processing Food Steamer Roaster Oven Top 3 Share Categories
Bread Maker Fryers Sandwich Maker
Shown in Green
Citrus Juicer Garment Steamer Single Serve Brewer (w Pod)
Coffee Grinder Hand Blenders Slow Cooker
Coffee Maker (ADC) Hand Mixer Sous Vide
Coffee Percolators Ice Cream/Yogurt Maker Specialty Drink Maker
Combo Hand/Stand Mixer Ice Shaver/Snow-Cone Makers Stand Mixer
Electric Can Opener Irons Tea Makers
Electric Griddle/Other Griddle Jar Openers Toaster
Electric Grills/Other Grills Juice Extractor Toaster Oven
Electric Kettles Kitchen System Vacuum Sealers
Electric Knives Meat Grinder/Mincer Waffle Iron
Electric Pasta Makers Multi-Cooker
Source: NPD POS – Units, 12 months ending 12/31/2019 8
Electric Skillet
GLOBAL FOOTPRINT TO SERVE CUSTOMERS
Minneapolis,
Minnesota Belleville,
Markham, Ontario
Sales Office Ontario
Canada HQ - Sales
and Marketing Distribution
Center
Geel, Belgium
Richmond, Virginia Distribution Center
Corporate Headquarters
Seattle, Washington All Disciplines Shanghai, China
Sales Office Sales Office, Engineering,
Quality Assurance
Southern Pines, North
Bentonville, Carolina
Arkansas Service Center
Sales Office
Miami, Florida Suzhou, China
Sales Office Distribution Center
Olive Branch,
Mississippi
Distribution Center
Mexico City, Mexico
Mexico HQ - Sales and
Marketing; Administrative
3rd Party Manufacturers
throughout China
Shenzhen, China
Engineering, Quality
Tultitlan, Mexico Assurance, Operations,
Distribution Center and Distribution Center
Santa Catarina,
Brazil
Distribution
Center Operations
Corporate HQ
Regional HQ
3rd Party Manufacturers
Sales
9
HBB HISTORICALLY GENERATED STRONG CASH FLOWS
2020 Goal: Significantly Exceed $20 Million in Cash Flow Before Financing
PRIORITY USES OF CASH
Pay Down Debt – Low debt level positions
$18M AVERAGE ANNUAL
company for many forms of investing in growth
Reinvest in Core Growth
Support Strategic Initiatives
Return Capital to Shareholders
CASH FLOW BEFORE FINANCING
Dividends
ACTIVITIES
FROM CONTINUING OPERATIONS Share Repurchases
2015-2019 Accretive Acquisitions: Right Fit at the Right
Valuation
10100+ YEARS OF INNOVATION LEADERSHIP
New Product Development Based on Consumer Research and Market Gaps
New Product Platform Introductions Ramped Up Over Last Several Years
54 67 87 90 64 76
2007 - 2015 2016 2017 2018 2019 2020
Average
We have increased our focus on fast-follow and breakthrough efforts, introduced new
platforms receiving high consumer interest and have a strong pipeline.
11AIR FRYER PRODUCT EVOLUTION
Innovating with a Broad Variety of Functionality
NEW 2020 NEW 2020
Air Fryer Sure-Crisp™ Hamilton Beach Professional
Air Fryer Toaster Oven Sure-Crisp® Digital Air Fryer
12IoT: WI-FI CONNECTED PRODUCTS
NEW 2020
Easily use Alexa®
remote commands
or app to brew
coffee
Adjust cooking from the
HB Connect App
Real-time alerts allow
the cooking process to
be monitored and
adjusted remotely
Smart 12-cup Coffee Maker Smart Slow Cooker
13NUTRI-FRESHTM VACUUM SEALER
Seals Liquid Foods Quickly and Consistently
NEW 2020
Patent-pending, dual-stage
design seals liquid foods without
having to freeze first
Patent-pending, integrated date
coder heat-stamps date onto the
bag
Unique 2-roll storage
compartment with built-in cutter
14FLEXBREW® COFFEE MAKERS
How You Brew Is Up To You - The Ultimate Flexibility in Brewing
NEW 2020
BREW GROUNDS
OR SINGLE SERVE
PACKS
FlexBrew® 2-Way Coffee Maker FlexBrew ® Single-Serve
Coffee Maker with Frother
15
15C R A F T TM C O F F E E M A K E R S A P P E A L T O C O N S U M E R S
Design Test Research Verbatim
NEW 2020
“It’s an innovative “I like the dual
product and I’d like functionality.”
to have one.”
“It makes it easy to
“It’s simple, different,
make at home, and it
easy to use, perfect for
speeds up the
every household.”
process.”
Cold Brew Pour Over
Source: HBB 2018 Design Test
16EGG BITES MAKER
Breakfast Appliances that Create Coffee Shop Results Are Seeing Rapid Growth
NEW 2020
Make Perfect Egg Bites
or Poached Eggs
2
COLORS
17EXPERT-TOAST™ TOASTER
Perfectly Toasts Any Size Bread Evenly on Both Sides
NEW 2020
6 bread presets and desired toast shade
Extra-wide, longer slots for variety of bread
Sure-Toast™ Technology evenly toasts a
single slice of bread
18
18SIX STRATEGIC
GROWTH INITIATIVES
Goals:
Revenue of $750M to $1B
Operating Profit Margin of 9% to 10%
19ESTABLISH LEADING SHARE
OF ONLY-THE-BEST SEGMENT
20ONLY–THE–BEST SEGMENT
HBB Began to Build a Premium Product Portfolio in 2014
1/3 Approximately 1/3 of U.S. Small Kitchen Appliance
Industry Dollars is in the Only-the-Best segment
2014 2015 2016 2017 2019
Only-the-Best Brands Grew 7.4% in 2019 and Accounted for 9% of Total Revenue
Sales Are Up Year-Over-Year in 2020
21 21NEW 2020
Stand Mixer Precision Griddle Kettle
22NEW 2020
STEAM PRODUCTS
Powerful steam
Precise temperature
Professional results
Hand Held Steamer Touchscreen Iron
23 23ALL NEW 2020
Stand Mixer Food Processor Coffee Grinder
With Spiralizer
24
24Sous Vide Food Dehydrator Vacuum Sealer
Immersion Circulator
2516 FLAVORS
26
26ENHANCE ECOMMERCE
LEADERSHIP
27
27MORE INDUSTRY SALES MOVING ONLINE
U.S. Small Kitchen Appliances Industry – Channel Share and % Growth
Unit Share Dollar Share
+14% +12%
Online volume growth Online volume growth
7.2 7.7
24.1 26.8 Other* 6.7 5.9
33.0 35.2
Online
Store
68.7 65.5
60.3 58.9
*Other includes television,
catalog, mail order
2018 2019 2018 2019
* Source: NPD Consumer Database, 12 Months ending Dec. 2018 & 2019
28HBB IS A LEADING PROVIDER IN ECOMMERCE
Ecommerce Is Strong and Fast Growing Part of HBB Business
BRAND Star Rating
Hamilton Beach® is the #1 brand in the
Hamilton Beach 4.16 US ecommerce channel based on units
Proctor Silex 4.02 Strong presence across multiple
TrueAir 4.06 ecommerce platforms globally
Weston 4.01
Hamilton Beach global ecommerce sales
CHI 4.26
increased 27% in 2019 and accounted for
Hamilton Beach Professional 4.18 25% of total revenue
Wolf Gourmet 4.51
Bartesian 4.45
All HBB brands earn >4-star ratings
Brightline 4.56 Strong reviews underscore brand
reputation, innovation, product quality and
safety
Source: Star ratings are based on multiple online platforms. Data as of May 31, 2020
29
29Q2 2020 ECOMMERCE SALES INCREASED 77%
Years of Investment in Ecommerce Capabilities Is Yielding Returns
▪ Core strength in the ecommerce channel
Q2 2020
77% GROWTH has played an important role in our
performance through pandemic as stay-
home shift occurred
37%
▪ Success requires years of investment in
people, quality levels, content, buy box
63% management, among many others
▪ Our online retailer relationships are diverse
and global
▪ We continue to develop expertise and take
Brick & Mortar Ecommerce actions to gain share in key ecommerce
markets, with a focus on the US, Canada
and Mexico for retail and the US, APAC
and EMEA markets for commercial 30EXPAND GLOBAL
COMMERCIAL LEADERSHIP
31
31GLOBAL COMMERCIAL MARKET IS GROWING
HBB Holds a Leading Position in the Global Commercial Market
■ Opportunity to accelerate growth in
the $18B global commercial market (1)
■ Company’s commercial brand
reputation for performance, reliability
and differentiated products is driving
growth
■ Increasing penetration of products at
regional and global chains
Delivers higher margin and since 2010 has grown at a faster rate
than our retail markets
_____________________
(1) Company estimate. Accounted for 8% of Total Revenue in 2019
32CURRENT COMMERCIAL MARKET
Demand During Pandemic Has Fallen Due to
Closures in Food Service and Hospitality Industries
The pandemic has impacted our business, however,
we are positioned to maximize any rebound that could
potentially occur
We have expanded our category participation, which
broadens our ability to secure revenue outside of our
core blender and drink mixer business
Our digital marketing capabilities allow us to more
easily interact with customers and distribution
partners that are locked down
Our ecommerce strength allows us to maximize sales
as the pandemic “recovery” unfolds
Confident long-term prospects remain strong
33
33NEW 2020
PrimaVac™ AcuVide 1000™
Vacuum Sealers Immersion Circulator
Vacuum sealing
provides flexibility
Retains freshness
and color
Pairs well with sous vide
34
34NEW 2020
35
35ENTER NEW
EMERGING MARKETS
36INTERNATIONAL MARKETS EXPANSION
Significant Opportunity for Growth in Emerging Markets
United
States
Expanding internationally 76% HBB
in the emerging Asia and 2019 SALES
Latin America markets and BY
International
continuing to expand GEOGRAPHY Markets
in Canada and Mexico 24%
(1) Source: Euromonitor International for the year 2017.
37JUICER MIXER GRINDER DEVELOPED FOR INDIAN COOKING
Introduced in India in 2019 and Expanding to Other Markets in 2020
Developed for India Market
Leverages household and commercial
expertise
Designed for superior performance,
durability, safety and convenience
Commercial grade motor
38
38HIGH PERFORMANCE BLENDER DEVELOPED FOR CHINA
▪ Adapted for the Chinese consumer
▪ Uses ExtremeTemp jar
▪ Handles heavy-duty usage with hot
beverages and foods
▪ Provides a soymilk preset feature
39
39ENTER NEW
CATERGORIES
40New Personal Care Brand Introduced in 2019 in Ecommerce Channel
NEW 2021 NEW 2021
Oral Care Hair Dryer
Facial Cleansing Brush
Toothbrush, Water Flosser
41
41NEW CATEGORY EXPANSION
Leveraging Branding, Sourcing, Distribution Capabilities
ALL NEW 2020
Compact Waffle Cone
Single Refrigerator Maker
Countertop
Induction
Ice Maker
Cooktop
1200-watt Single Burner
Single Burner
42
42STRATEGIC
ACQUISITIONS
43
43STRATEGIC ACQUISITIONS STRATEGY
Disciplined Approach – Right Fit at the Right Valuation
TARGET PROFILE VALUE CREATION
■ Opportunity in consumer or ■ Added dedicated resource in
commercial markets 2020 to increase focus
■ Competitive market position ■ Disciplined
■ Potential to enter new product ■ Accelerate revenue growth
categories and margin expansion
■ Highly accretive when layered
■ Strong brand or channel
into current business model
presence
■ Meet or exceed return on
■ Ecommerce focus capital targets
44LEADING WITH STRENGTH DURING GLOBAL PANDEMIC Our Priorities Protect the health and safety of our employees as we strive to meet the needs of our customers and consumers and navigate the challenges Our Team Our team has responded and adapted quickly as we manage through this unprecedented set of circumstances. 45
HBB IS WELL POSITIONED TO NAVIGATE CHALLENGES
Strengths from Our Investments Position Us to Maximize Performance
HB
Broad Portfolio Comprehensive Experienced Global
of Offering from Team Infrastructure
Trusted Brands Value to Luxury Members to Support
50+ Categories Globally Customers
Broad Range Well Developed Strategic Initiatives to
of Retailer Ecommerce Capability, Drive Revenue Growth
Relationships including and Margin Expansion
Across All Direct-to-Consumer
Channels Operation
46US SKA INDUSTRY DEMAND IS SOLID AND ONGOING
Small Kitchen Appliances Are Filling Consumer Needs During Pandemic
US SKA Market & HB Units Growth
Pre and Post COVID-19
2.7
-0.1 33.0 37.5
Pre-Covid (Jan'20 - Mar'20) Post-Covid (Apr'20 - Jun'20)
Grand Total Hamilton Beach
47 Source: NPDMAINTAINING
FINANCIAL FLEXIBILITY
HBB Moved Early and Aggressively to
Reduce Expenses and Risk
Managing Headcount and Payroll
Hiring Freeze for Most Open Positions
Reduce Discretionary Expenses
Focused Capital Spending on Critical Needs
Minimize Inventory Shortfalls or Excess
Managing Credit Risks
Supplier Cost Negotiations
Delay Tax Filings Where Possible
No Share Repurchases in 1H 2020
48HBB LIQUIDITY IS SOUND
HBB Debt Has Decreased Significantly
Due to Net Working Capital Improvements and
Significantly Increased Cash Flow
At 6-30-2020:
Significantly improved working capital
Cash Flow Before Financing $19M
Debt $40.2M, down significantly from PY
We believe that cash on hand, our Credit Facility and
operating cash flows will provide sufficient liquidity to
meet operating needs and commitments
Balance sheet is strong
Industry demand remains solid
Second-half placements and promotions strong
Continue to pay dividend
Positioned well for when conditions stabilize
4950
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