Hamilton Beach Brands Holding Company
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HAMILTON BEACH BRANDS HOLDING COMPANY 2019 Investor Presentation Safe Harbor Statement This presentation includes forward-looking comments subject to important risks and uncertainties. Refer to Hamilton Beach Brands Holding Company’s reports filed on Forms 8-K (current), 10-Q (quarterly), and 10-K (annual) for information on factors that could cause actual results to differ materially from information in this presentation. Past performance may not be representative of future results. This presentation is not an offer to sell or a solicitation of offers to buy any of Hamilton Beach Brands Holding Company’s securities. 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 WHO WE ARE Hamilton Beach Brands Holding Company (HBBHC) is an operating holding company for: Hamilton Beach Brands (HBB) - A leading global designer, marketer and distributor of branded small electric household and specialty housewares appliances, as well as commercial products for restaurants, bars and hotels. The Kitchen Collection (KC) - A national specialty retailer of kitchenware in outlet and traditional malls throughout the U.S. Listed on NYSE: Ticker Symbol HBB 2 HBBHC 2018 REVENUE - $743.2M KC $633.8M 15% HBB 2018 Revenue 2018 $113.5M Revenue by KC 2018 Revenue Segment HBBHC: Operating Profit: $32.3M Net Income: $21.8M HBB 85% 2018 Revenues of $743.2 million is net of $4.1 million of eliminations (intercompany sales) 3 INVESTMENT HIGHLIGHTS Proven Business Model Drives Results ▪ Commitment to Building Long-Term Shareholder Value ▪ Experienced Team Focused on Our Customers and Consumers ▪ Iconic Brands Serving Consumer and Commercial Markets Globally ▪ Comprehensive Product Offering - Value to Luxury ▪ Broad Customer Base and #1 Presence in Key Channels ▪ Leading Provider to the Growing E-commerce Market ▪ Focus on Innovation - 100+ Year History of Creating New and Innovative Products ▪ Global Infrastructure and Efficient Supply Chain ▪ Six Strategic Initiatives to Drive Long-Term Growth ▪ Historically Strong Cash Flows and Financial Flexibility 4 COMPREHENSIVE COVERAGE Brands, Price Points, 50+ Categories Luxury P R I C E P O I N T COVERAGE Value Coffee Fondue Set #1 $ rank #50+ $ rank CATEGORY COVERAGE 5 HAMILTON BEACH® IS THE #1 BRAND Hamilton Beach Drives Retailers’ Traffic In Stores and Online % Unit Share – U.S. Small Kitchen Electrics 12.3 8.5 5.6 4.9 4.7 4.4 4.4 4.3 3.5 Hamilton Black + Decker Oster Mr.Coffee Instant Pot Crock Pot Keurig Cuisinart Kitchen Aid Beach Source: NPD POS database, 12 & 6 months ending December 2018 – SKA + Garment care 6 HBB BRANDS ARE TOP 3 IN 28 CATEGORIES Gained Share in 26 Categories in 2018 • Air Fryers • Espresso Maker • Other Waffle Iron/Sandwich • Blending (Traditional) • Food Processor Maker • Blending (Single Serve) • Food Chopper • Pizza Ovens • Other Blending & Processing • Food Steamer • Popcorn Makers • Breadmaker • Fryers (excluding Air Fryers) • Rice Cooker • Citrus Juicer • Garment Steamer • Roaster Oven • Coffee Grinder • Hand Blenders • Sandwich Maker • Coffeemaker (ADC) • Hand Mixer • Single Serve Brewer (w Pod) • Coffee Percolators • Ice Cream/Yogurt Maker • Slow Cooker • Combo Hand/Stand Mixer • Ice Shaver/Sno-Cone • Sous Vide • Electric Can Opener Makers • Specialty Drink Maker • Electric Griddle/Other • Irons • Stand Mixer Griddle • Jar Openers • Tea Makers • Electric Grills/Other Grills • Juice Extractor • Toaster • Electric Kettles • Kitchen System • Toaster Oven • Electric Knives • Meat Grinder/Mincer • Vacuum Sealers • Electric Pasta Makers • Multi-Cooker • Waffle Iron • Electric Skillet Source: NPD POS – Units, 12 months ending 12/31/2018 Green – Top 3 Share Category 7 GLOBAL INFRASTRUCTURE Strategically Located Footprint to Serve Customers Markham, Ontario Operations Canada Sales Corporate HQ and Picton, Regional HQ Sales Administration Ontario 3rd Party Manufacturers Minneapolis, Headquarters Distribution Minnesota Center Sales Office Richmond, Virginia Seattle, Corporate Geel, Belgium Washington Headquarters Distribution Sales Office All Disciplines Center Shanghai, China Sales Office, Southern Pines, Engineering, Quality North Carolina Assurance Service Center Bentonville, Arkansas Sales Office Miami, Florida Suzhou, China Olive Branch, Sales Office Distribution Mississippi Center Distribution Mexico City, Mexico Center Mexico Marketing, Sales and Administrative 3rd Party Headquarters Manufacturers Shenzhen, China throughout China Engineering, Quality Tultitlan, Assurance, Mexico Operations, and Distribution Distribution Center Center Jundiai, Sao Sao Paulo, Brazil Paulo, Brazil Brazil Sales and Distribution Administrative Center Headquarters 8 13 OUR CORE PRINCIPLES Our Vision To be the leading supplier of retail and commercial small appliances Our Deliver profitable growth from innovative solutions that improve everyday living Mission 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 areas of our business Ethics: Honest, ethical behavior – always Our Passion for Quality: Ensure the quality of our products and services is best in class Values Embrace Change: There is always a better way. Change is accelerating Teamwork: Help each other to succeed. We share both successes and failures, we communicate, we move as one Our Environment and Our Community: Productively manage our business in a sustainable, socially and environmentally responsible manner. We help make our community better 9 “GOOD THINKING” PROCESS Encourage and Cultivate Inspired Thinking in All Areas of Business Consumer Innovation Focus Excellent Work Quality Environment Good Thinking Testing Work Smart Testing Testing Trusted Best-in-Class Globally Logistics 10 11 FOCUS ON INNOVATION “Good Thinking” Process Drives New Product Development New Product Platform Introductions 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 HBB aggregated data from 25,500 consumers in 2018 to inform the development of new, research-driven products. HBB generated approximately 30% of its revenue in the last 3 years from products that are less than 3 years old. 11 “Good Thinking” – Coffee Makers COMPACT PROGRAMMABLE COFFEE MAKER EASY TO FILL FROM FRONT SPACE-SAVING DESIGN EFFICIENT TO SHIP VIA E-COMMERCE AND BRICK & MORTAR METHODS GREAT FOR SMALLER HOUSEHOLDS HIGHLY RATED WITH LEADING RATING MAGAZINE 12 “Good Thinking” – Coffee Makers PROGRAMMABLE EASY ACCESS PLUS COFFEE MAKER ENGINEERED TO DELIVER GREAT TASTING COFFEE FRONT-FILL DESIGN FRESHNESS INDICATOR EASY TO CLEAN 13 “Good Thinking” – Coffee Makers THE SCOOP ® SINGLE-SERVE COFFEE MAKER SINGLE SERVE CONVENIENCE WITHOUT THE EXPENSE OR WASTE OF PODS USES GROUND COFFEE HOTTER, FASTER, BETTER TASTE 14 “Good Thinking” – Coffee Makers BREWSTATION® DISPENSING COFFEE MAKER BREWS COFFEE INTO TANK WITH SEPARATE, GENTLE HEATER NO CARAFE NEEDED ONE-CUP CONVENIENCE KEEPS COFFEE FRESHER LONGER 15 “Good Thinking” – Coffee Makers FLEXBREW ® ULTIMATE FLEXIBILITY IN BREWING 2 WAYS OF BREWING SINGLE CUP OR FULL POT BREW GROUNDS OR SINGLE SERVE PACKS 16 “Good Thinking” – Coffee Makers NEW AUTOMATIC DRIP COFFEE MAKER PRECISION TECHNOLOGY FOR SUPERIOR TASTING COFFEE SCALE TO ENSURE EXACT COFFEE LEVEL EVERY TIME PRECISE WATER TEMPERATURE AND BREW TIME 5 BREW STRENGTH LEVELS 17 “Good Thinking” – Unique Features PRESSURE COOKERS ENTERING CATEGORY WITH A UNIQUE FEATURE AND BETTER SLOW COOKING FUNCTION SLOW COOK MODE WITH HIGH, MEDIUM & LOW 10 ADDITIONAL PROGRAM SETTINGS PRESSURE RELEASE BUTTOM SAFELY KEEPS HANDS AWAY FROM STEAM EASY-TO-USE INTERFACE & DESIGN 18 “Good Thinking” – Personal Blending PERSONAL QUIET BLENDER FULL SIZE CAPABILITIES FOR PERSONAL SIZE BLENDING BLADES CRUSH ICE, FROZEN FRUITS, NUTS, GRAINS AND SEEDS QUICKLY UNIQUE QUIET SHIELD GREAT FOR EARLY MORNING BLENDING CLASSIC CUP DESIGN DOUBLES AS A DRINKING VESSEL 19 GROWTH OBJECTIVES Long-Term Growth Goals (excludes KC): $750 M - $1 B in Revenue and 9% - 10% Operating Profit 20 STRATEGIC INITIATIVES 21 ONLY-THE-BEST Increasing Share in High–End Market with Premium Brands HBB Only-The-Best Products Sales +40% in 2018 2014 2015 2016 2017 Approximately 1/3 of U.S. Small Kitchen Appliance Industry Dollars 1/3 is in Only-the-Best segment 22 23 NEW IN 2018 Deluxe Automatic Multi-Function Cooker Drip Coffee Maker Countertop Oven Precision Griddle Upgraded 24 STAND MIXER NEW IN 2019 ROBUST MOTOR AND GEARING SYSTEM THAT WILL PROVIDE GENERATIONS OF SUPERIOR PERFORMANCE UNIQUE BOWL-LIFT DESIGN OFFERS INTUITIVE ENGAGEMENT AND EXCELLENT STABILITY VARIABLE SPEED DIAL ALLOWS CONTROL POWER TAKE-OFF SPECIALTY ATTACHMENTS SUCH AS FOOD GRINDER, PASTA MAKER, SPIRALIZER 25 DELUXE ELECTRIC FOOD MILL NEW IN 2019 INTERLOCKING CHUTE DESIGN ALLOWS FOR CONTINUOUS FEED NON-SLIDE FEET FIT SECURELY OVER BOWLS AND POTS UP TO 10”IN DIAMETER 26 5 AND 7 SPEED HAND MIXERS POWERFUL DC MOTOR MIXES WITH EASE SLOW STARTING SPEED REDUCES SPLATTER INCLUDES SNAP-ON STORAGE CASE WITH BEATERS, DOUGH HOOKS & WISK LOCKABLE SWIVEL CORD FOR RIGHT – OR LEFT – HAND USE 27 TOUCHSCREEN IRON TOUCHSCREEN TEMPERATURE CONTROLS TITANIUM INFUSED CERAMIC SOLEPLATE OVER 400 STEAM HOLES FOR SUPERIOR PERFORMANCE 28 STRATEGIC INITIATIVES 29 GLOBAL E-COMMERCE Positioned to Make HBB the Preferred Partner Globally ◼ Online sales of housewares is the fastest growing segment and accounted for over 25% of U.S. industry sales in 2018 ◼ HBB is leveraging its strengths and