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 has built leading processes and capabilities globally
◼ As consumer shopping habits continue to evolve to rely more on the internet, HBB is focused on:
◼ Providing best-in-class retailer support
◼ Increasing engagement with end users
◼ Enhancing programs designed to be the preferred partner globally
30 GLOBAL E-COMMERCE HBB Products Earn Strong Online Ratings and Reviews
Consumers have become very focused on reviews and star ratings, Brand Rating Average Star which take into account brand Kitchen Aid 4.7 reputation, innovation, product Wolf 4.4 quality and safety CHI 4.3 Hamilton Beach 4.1 Hamilton Beach® was #1 selling Hamilton Beach Professional 4.1 brand in the U.S. e-commerce Cuisinart 4.1 channel in 2018, based on units Oster 4.1 Weston 4.0 HBB provides support for Proctor Silex 3.9 promotion, marketing and distribution programs appropriate Black & Decker 3.8 for online channel
Source: Star ratings are based on multiple online platforms. 31 DIGITAL INVESTMENT How We Inspire, Drive and Connect with Consumers
Digital Marketing Data Analytics ▪ Social media advertising ▪ Price tracking intelligence ▪ Paid influencer campaigns ▪ Review scraping ▪ Evergreen affiliate marketing program ▪ Market data ▪ CRM – Targeted outreach programs ▪ Review seeding & syndication (Bazaar Voice)
Content Development & Deployment Internet of Things (IoT) Program ▪ Full content kit for all new products ▪ HB Connect app ▪ Content refreshes ▪ Connected product roadmap ▪ Content deployment via Salsify ▪ Partnership exploration ▪ Videos
32 ALEXA-ENABLED SMART COFFEE MAKER
VOICE-ENABLED CONTROLS
WORKS WITH ALEXA
“Alexa, Brew My Coffee” “Alexa, Is My Coffee Ready?” “Alexa, When Was My Coffee Brewed?”
FULLY FEATURED FRONT-FILL COFFEE MAKER
33 STRATEGIC INITIATIVES
34 GLOBAL COMMERCIAL 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
Global Commercial Sales +7% in 2018 Global Commercial Sales CAGR 6% since 2010
______(1) Company estimate. 35 NEW COMMERCIAL SEGMENTS
Otto ™ PrimaVac ™ Quantum ™ Juice Extractor Vacuum Packaging High Performance Blender
36 STRATEGIC INITIATIVES
37 INTERNATIONAL MARKETS Significant Opportunity for International Growth
Rest of World 10%
◼ Expand internationally in the INDUSTRY North Asia- emerging Asia and Latin America America SMALL Pacific markets and continue to expand in 24% APPLIANCE 45% Canada and Mexico SALES BY REGION (1) ► Leverage strength of brands and innovative products United Europe States 21% ► HBB International revenue +7% in 76% 2018 with emerging markets +21%
HBB 2018 SALES BY GEOGRAPHY
International 24%
(1) Source: Euromonitor International for the year 2017. 38 NEW INTERNATIONAL PRODUCTS
Latin America China India
Removable High Performance Juicer Mixer Reservoir Iron Blender Grinder
39 STRATEGIC INITIATIVES
40 NEW CATEGORIES 2017 & 2018
Compact Buffet Server Electric Crepe Maker Refrigerator
Kitchen Scales Air Pots Yogurt Maker Bathroom Scales
41 HAMILTON BEACH NEW CATEGORIES 2017 & 2018
Pasta Maker Knife Sharpeners Ice Maker
Laundry Accessories
42 AIR PURIFICATION AND ODOR ELIMINATORS
A LIMITED LINE OF PRODUCTS THAT ADDRESSES CONSUMERS’ NEED FOR ALLERGEN AND ODOR CONTROL
EXPANDING OUR PRODUCT LINE UP MOVING FORWARD
43 STRATEGIC INITIATIVES
44 STRATEGIC ACQUISITIONS Accretive – Right Fit at the Right Price
TARGET PROFILE VALUE CREATION
◼ Opportunity in consumer or ◼ Accelerate growth and margins commercial ◼ Highly accretive when layered into ◼ Competitive market position current business model
◼ HBB potential to enter new product ◼ Meet or exceed return on capital categories targets
◼ Strong brand or channel presence
◼ E-commerce focus
45
21 KITCHEN COLLECTION Positioning to Deliver Acceptable Financial Return Optimize store portfolio by focusing on strong outlet malls and exiting stores that do not generate acceptable returns ▪ Average lease duration expected to be approximately one year for 85% of stores by the end of 2019. ▪ KC expects to move to a smaller core group of 100 – 150 profitable stores over time. The final number will depend on store by store performance. Continued focus on gross margin, working capital and expense reduction ▪ Emphasis on increasing sales of higher margin products ▪ Maintain inventory efficiency and right size expenses Focus on comparable store sales growth ▪ Working to enhance sales volume by continued refinement of product offerings, merchandise mix and store displays and appearance.
46 STRONG CASH FLOW Provides Financial Flexibility
$86.5M PRIORITY USES OF CASH ◼ Reinvest in Core Growth HBBHC CASH FLOW ◼ Support Strategic Initiatives ◼ Pay Down Debt
BEFORE FINANCING ◼ Return Capital to Shareholders
GENERATED OVER ◼ Dividends PAST 3 YEARS ◼ Share Repurchases ◼ Accretive Acquisitions – Strategic Fit at the Right Price
47 48