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Hamilton Beach Brands Holding Co (HBB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $132.8M (-15.2% YoY), gross margin fell to 21.1% due to a one-time $5M tariff cost (370 bps impact), and diluted EPS was $0.12; operating profit was $2.9M as tariff timing and a delayed large retailer weighed on results .
  • Management emphasized sequential improvement vs Q2 as retailer purchasing patterns normalized and cited cost actions and sourcing diversification; excluding the $5M tariff, gross margin would have been 24.8% and operating profit $7.9M (5.9%) .
  • Guidance remains suspended given tariff uncertainty; tone points to further top-line and margin recovery in Q4 as pricing and diversification actions flow through .
  • Potential stock reaction catalysts: normalization of retailer orders, tariff moderation, health division turning profitable, and premium/Commercial momentum (Lotus launch, Sunkist partnership) .

What Went Well and What Went Wrong

What Went Well

  • Commercial delivered “outstanding results,” with strong demand and early wins from Sunkist-branded commercial juicers/sectionizers; inventory constraints indicate underlying demand strength .
  • Hamilton Beach Health reached positive operating profit for the first time; partnerships expanded (Centerville, Lumasera), and Health Beacon Harmony launched with Novartis Ireland, improving patient acquisition and conversion .
  • Retail normalization and promotional strength: “record number of promotional activities” expected in Q4; largest retailer resumed normal cadence and exceeded expectations in October promotions .

What Went Wrong

  • One-time $5M tariff cost (related to temporary 125% China tariff spike) flowed through Q3 cost of goods, compressing gross margin by 370 bps; pricing lag versus cost increases further pressured margins .
  • U.S. consumer volumes were soft and one large retailer delayed orders “for most of the third quarter,” driving the majority of the revenue decline .
  • Cash flow pressured: net cash used for operating activities was -$14.6M for 9M’25, reflecting accounts payable timing and lower purchasing activity amid diversification initiatives .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$133.4 $127.8 $132.8
Gross Profit ($USD Millions)$32.8 $35.1 $28.0
Gross Margin (%)24.6% 27.5% 21.1%
SG&A ($USD Millions)$30.4 $29.1 $25.1
Operating Profit ($USD Millions)$2.3 $5.9 $2.9
Diluted EPS ($)$0.13 $0.33 $0.12
Net Income ($USD Millions)$1.8 $4.5 $1.7
YoY Revenue Change (%)+4.0% -18.2% -15.2%

Adjusted Q3 metrics (excl. one-time tariff costs):

MetricQ3 2025 ReportedQ3 2025 Adjusted (excl. $5M tariff)
Gross Profit ($USD Millions)$28.0 $33.0
Gross Margin (%)21.1% 24.8%
Operating Profit ($USD Millions)$2.9 $7.9
Operating Margin (%)2.2% 5.9%

Segment/KPI highlights:

MetricQ1 2025Q2 2025Q3 2025
Health Revenue ($USD Millions)$1.5 $1.7 N/A (not disclosed)
Health Operating Profit ($USD Millions)N/A-$0.864 Positive (first time)
Net Debt ($USD Millions)$1.7 $38.7 $32.8
Share Repurchases (Shares / $USD Millions)141,435 / $2.7 215,297 / $4.0 39,333 / $0.6
Dividends Paid ($USD Millions)$1.6 $1.6 $1.6

Estimate comparison (S&P Global):

MetricQ3 2025 ActualQ3 2025 Consensus
Revenue ($USD Millions)$132.8 N/A*
Primary EPS ($)$0.12 N/A*

*Values retrieved from S&P Global. Consensus data was unavailable for HBB at the time of this report.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Overall outlookFY 2025Guidance suspended (Apr) No specific guidance (Jul) Maintained (no guidance)
Overall outlookFY 2025No specific guidance (Jul) No specific guidance (Nov) Maintained (no guidance)
DividendQ3 2025$0.12/share (declared Aug 20) Paid in Q3 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3)Trend
Tariffs/macroQ1: initial 20% tariffs; accelerated diversification; FTZ certification; price increases, suspended guidance . Q2: broader industry disruption; 145% China tariff spike; mix-driven margin expansion; $10M annualized cost savings .One-time $5M tariff cost flowed through COGS; 370 bps margin hit; tariff rates moderated from Q2 peaks; pricing catching up .Stabilizing; acute Q3 cost absorbed; expecting recovery in Q4.
Supply chain & sourcing diversificationQ1/Q2: accelerated shift out of China; nimble procurement; target two-thirds of U.S. sales sourced outside China by YE’25 .“Fully absorbed” peak tariff impact; diversified APAC sourcing to pivot to best markets .Continued progress; clearer line of sight to margin normalization.
Retailer purchasing patternsQ2: pause and reassessment; resuming late in Q2 .Normalization through Q3; largest retailer delayed orders early but resumed; robust Oct promotions, record Q4 promotional slate .Improving; normalization and promotions support Q4.
Premium brand (Lotus)Q2: initial launch; >$5M marketing support over 18 months .Sell-through “exceeded expectations by strong double digits”; negotiating increased shelf space .Strengthening; distribution expanding.
Commercial businessQ2: contribution to margin; Sunkist partnership ramping .“Outstanding results”; demand constrained by inventory; expanding channels and large-chain relationships .Momentum building; potential upside with supply alignment.
Health/connected careQ1/Q2: growing subs; $1.7M Q2 revenue; loss narrowing .First profitable quarter; new specialty pharmacy partners; Novartis Ireland software launch; improved digital funnel metrics .Inflecting positively; scaling partnerships and software.
Capital allocationQ2: buybacks anti-dilution + opportunistic; maintain liquidity .Q3 buybacks continued ($0.6M) and dividends ($1.6M) .Balanced; ongoing shareholder returns with liquidity focus.

Management Commentary

  • “We fully absorbed the impact on gross margins from the peak tariff rate and have moved forward with a more balanced inventory position and a clear line of sight on returning gross margins more in line with historical levels.” — Scott Tidey, CEO .
  • “Excluding the $5 million of 125% one-time tariff costs, gross margin would have been $33 million, or 24.8%…Operating profit would have been $7.9 million, or 5.9%.” — Sally Cunningham, CFO .
  • “Initial [Lotus] sell-through results have exceeded expectations by strong double digits…we are actively negotiating to increase shelf space.” — Scott Tidey .
  • “Our newest division, Hamilton Beach Health, achieved a major milestone by reaching positive operating profit for the first time this quarter.” — Scott Tidey .
  • “We enacted comprehensive cost management measures…generated $10 million in annualized savings.” — Scott Tidey .

Q&A Highlights

  • Tariff accounting: $5M cost tied to temporary 125% China tariff recognized in Q3 COGS for containers “on the water”; not a separate charge, and distinct from go-forward tariff cost structure covered by pricing actions .
  • Retail normalization: largest retailer paused earlier but resumed; exceeded expectations in October promotions; normal cadence across retail partners into Q4 .
  • Buybacks & capital: Philosophy remains anti-dilution plus opportunistic repurchases subject to liquidity constraints (Q2 detail), continued Q3 buybacks/dividends .
  • Cost actions: $10M annualized savings; restructuring charge ~$0.8M in Q2 (context for OpEx trajectory) .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable for HBB’s Q3 2025 EPS and revenue at the time of this report; actual results: revenue $132.8M, EPS $0.12 .
  • Given the one-time tariff cost and pricing timing mismatch, near-term estimate revisions may reflect margin normalization expectations in Q4 and improved trajectory in 2026 as sourcing diversification completes .
  • S&P Global data note: Consensus fields were unavailable; see table above. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q3 was a transitory margin reset driven by a discrete $5M tariff cost and pricing lag; adjusted metrics indicate underlying margin resilience, with management expecting Q4 improvement as actions flow through .
  • Retailer order normalization and record Q4 promotions should support sequential revenue recovery; watch holiday sell-through and Lotus shelf-space expansion as top-line catalysts .
  • Commercial momentum and Health’s first profitable quarter diversify profit sources; scaling Sunkist and specialty pharmacy/software partnerships position these segments for mix-led margin support .
  • Cost discipline is tangible ($10M annualized savings) with lower SG&A and restructuring benefits aiding operating leverage as tariffs moderate from Q2 peaks .
  • Liquidity and capital allocation remain balanced (ongoing dividends and buybacks); net debt improved sequentially vs Q2; monitor working capital timing as diversification shifts supplier terms .
  • With guidance suspended, focus on leading indicators: gross margin trajectory, pricing realization versus tariff levels, retailer cadence, and progress against sourcing diversification milestones .
  • Medium-term thesis: Margin recovery into 2026 as two-thirds of U.S. sales are sourced outside China, coupled with premium/Commercial/Health growth vectors should enhance earnings quality and reduce tariff sensitivity .