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What changed in Hamilton Beach Brands Holding Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hamilton Beach Brands Holding Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+206 added−199 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-06)

Top changes in Hamilton Beach Brands Holding Co's 2024 10-K

206 paragraphs added · 199 removed · 146 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

31 edited+12 added−20 removed16 unchanged
Biggest changeProduct Design and Development We incurred $12.4 million, $11.8 million and $8.6 million in 2023, 2022 and 2021, respectively, in expenses on product design and development activities. Key Suppliers and Raw Material Our products are produced to our specifications by third-party suppliers. We do not maintain long-term purchase contracts with suppliers and operate mainly on a purchase order basis.
Biggest changeKey Suppliers and Raw Material Our products are produced to our specifications by third-party suppliers. We do not maintain long-term purchase contracts with suppliers and operate mainly on a purchase order basis. We negotiate the purchases from our foreign suppliers in U.S. dollars. During 2024, we purchased approximately three-fourths of our finished products from suppliers in China.
Item 1. BUSINESS General Throughout this Annual Report on Form 10-K and the notes to consolidated financial statements, references to “Hamilton Beach Holding”, “the Company”, “we”, “us” and “our” and similar references are to Hamilton Beach Brands Holding Company and its subsidiaries on a consolidated basis unless otherwise noted or as the context otherwise requires.
Item 1. BUSINESS General Throughout this Annual Report on Form 10-K and the notes to consolidated financial statements, references to “Hamilton Beach Holding”, “the Company”, “w e”, “us” and “our” and similar references are to Hamilton Beach Brands Holding Company and its subsidiaries on a consolidated basis unless otherwise noted or as the context otherwise requires.
For more information about the risks we face regarding regulatory requirements, see Part I, Item 1A of this Annual Report titled, “Risk Factors - Government regulations could impose costly requirements on our business.” Human Capital Resources Our business is dependent upon, and focused on, people—our employees, our customers and the consumers who enjoy our appliances, and the communities in which we live.
For more information about the risks we face regarding regulatory requirements, see Part I, Item 1A of this Annual Report titled, “Risk Factors - Government regulations could impose costly requirements on our business.” Human Capital Resources Our business thrives on people—our employees, customers, consumers who enjoy our appliances, and the communities we serve.
Hamilton Beach® is the #1 small kitchen appliance brand in the U.S., in brick-and-mortar and ecommerce channels, based on units sold. To a lesser degree, our retail product lines compete outside of North America.
Hamilton Beach® is the #1 small kitchen appliance national brand in the U.S., in brick-and-mortar and ecommerce channels, based on units sold. To a lesser degree, our retail product lines compete outside of North America. Our commercial products compete globally and have generated a strong position in these markets.
Hamilton Beach Brands Holding Company is a holding company and operates through its indirect, wholly owned subsidiary, Hamilton Beach Brands, Inc., a Delaware corporation (“HBB”). HBB is the Company’s single reportable segment.
Hamilton Beach Brands Holding Company is a holding company and operates through its indirect, wholly owned subsidiary, Hamilton Beach Brands, Inc., a Delaware corporation (“HBB”).
Scott Tidey 59 President of Hamilton Beach Holding (from February 2024), Senior Vice President, Global Sales of HBB (from January 2023 to February 2024), Senior Vice President, Consumer Sales & Marketing of HBB (from March 2021 to January 2023), Senior Vice President, North America Sales and Marketing of HBB (from prior to 2019 to March 2021) Sally M.
Scott Tidey 60 Director, President and Chief Executive Officer of Hamilton Beach Holding (from October 2024), President of Hamilton Beach Holding (from February 2024 to September 2024), Senior Vice President, Global Sales of HBB (from January 2023 to February 2024), Senior Vice President, Consumer Sales & Marketing of HBB (from March 2021 to January 2023), Senior Vice President, North America Sales and Marketing of HBB (from prior to 2020 to March 2021) Sally M.
We are a leading designer, marketer and distributor of a wide range of branded small electric household and specialty housewares appliances, as well as commercial products for restaurants, fast food chains, bars and hotels.
We are a leading designer, marketer and distributor of a wide range of brand name small electric household and specialty housewares appliances, and commercial products for restaurants, fast food chains, bars and hotels, and a provider of connected devices and software for home healthcare management.
Recent Developments On February 5, 2024, we announced that our Hamilton Beach Health ® subsidiary acquired HealthBeacon PLC (“HealthBeacon”), a medical technology firm and strategic partner of the Company. HealthBeacon develops connected devices that enable patients with chronic conditions to manage their injectable medication regimens at home and provides other health services.
In February 2024, our Hamilton Beach Health ® brand acquired HealthBeacon PLC (“HealthBeacon”) a medical technology firm and strategic partner of the Company. HealthBeacon develops digitally connected devices that enable patients to manage at home chronic conditions that require the use of injectable medications, and it provides other health services.
Cunningham 49 Senior Vice President, Chief Financial Officer and Treasurer of Hamilton Beach Holding (from May 2023), Senior Vice President and Chief Financial Officer of Hamilton Beach Holding (from March 2023 to May 2023), Finance Consultant of Azurite, LLC (from November 2021 to February 2023), Senior Vice President and Chief Financial Officer of Ascent Industries Co.
Cunningham 50 Senior Vice President, Chief Financial Officer and Treasurer of Hamilton Beach Holding (from May 2023), Senior Vice President and Chief Financial Officer of Hamilton Beach Holding (from March 2023 to May 2023),Operating Partner of One Rock Capital Partners (from November 2021 to February 2023), Senior Vice President and Chief Financial Officer of Ascent Industries Co.
The principal raw materials used by our third-party suppliers to manufacture our products are plastic, glass, steel, copper, aluminum and packaging materials. We believe adequate quantities of raw materials are available from various suppliers.
However, the loss of a supplier could, in the short term, adversely affect our business until alternative supply arrangements are secured. The principal raw materials used by our third-party suppliers to manufacture our products are plastic, glass, steel, copper, aluminum and packaging materials. We believe adequate quantities of raw materials are available from various suppliers.
We are a learning organization committed to the goal of continuous improvement and the development of our workforce.
As a learning-focused organization, we are committed to continuous improvement and fostering the growth of our team.
Our five largest customers accounted for approximately 64%, 61% and 61% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively. 1 Table of Contents Product Warranty Our warranty program to the consumer consists generally of an assurance-type limited warranty lasting for varying periods of up to ten years for electric appliances, with the majority of products having a warranty of one to three years.
Product Warranty Our warranty program to the consumer consists generally of an assurance-type limited warranty lasting for varying periods of up to ten years for electric appliances, with the majority of products having a warranty of one to three years.
Walmart Inc. and its global subsidiaries (“Walmart”) accounted for approximately 27%, 26% and 28% of our revenue in 2023, 2022 and 2021, respectively. Amazon.com, Inc. and its subsidiaries (“Amazon.com”) accounted for approximately 24%, 23% and 22% of our revenue in 2023, 2022 and 2021, respectively.
Sales from our Health segment are generated through pharmaceutical and specialty pharmacy companies. Walmart Inc. and its global subsidiaries (“Walmart”) accounted for approximately 29%, 27% and 26% of our consolidated revenue in 2024, 2023 and 2022, respectively. Amazon.com, Inc. and its subsidiaries (“Amazon.com”) accounted for approximately 24%, 24% and 23% of our revenue in 2024, 2023 and 2022, respectively.
Customers Sales in North America are generated predominantly by a network of inside sales employees to mass merchandisers, ecommerce retailers, national department stores, variety store chains, drug store chains, specialty home retailers, distributors, restaurants, bars, hotels and other retail outlets.
Sales promotion activities are supported primarily through digital marketing vehicles. 1 Table of Contents Customers Sales from our Home and Commercial Products segment are generated predominantly by a network of inside sales employees to mass merchandisers, ecommerce retailers, national department stores, variety store chains, warehouse clubs, specialty home retailers, distributors, restaurants, bars, hotels and other retail outlets.
There is no guarantee to the consumer as we may repair or replace, at our option, those products returned under warranty. Seasonality and Working Capital The market for small electric household and specialty housewares appliances is highly seasonal in nature.
There is no guarantee to the consumer as we may repair or replace, at our option, those products returned under warranty.
Additionally, we participate in the premium market through multiyear licensing agreements to market and distribute a line of countertop appliances under the Wolf Gourmet ® brand, a line of premium garment care products under the CHI ® brand and the Bartesian ® premium cocktail delivery system.
Additionally, we participate in the premium market through multiyear licensing agreements to market and distribute CHI ® premium garment care products, Clorox ™ home appliances, Brita Hub ™ countertop electric water filtration appliances, the Bartesian ® premium cocktail delivery system and Numilk ® plant-based milk makers.
We believe that our business is not dependent upon any individual patent, copyright or license, but that the Hamilton Beach ® , Proctor Silex ® , Hamilton Beach ® Professional and Weston ® trademarks are material to our business.
We believe that our business is not dependent upon any individual patent, copyright or license, but that the Hamilton Beach ® and Proctor Silex ® trademarks are material to our business. Product Design and Development We incurred $13.7 million, $12.4 million and $11.8 million in 2024, 2023 and 2022, respectively, in expenses on product design and development activities.
We believe the loss of any one supplier would not have a long-term material adverse effect on our business because there are adequate supplier choices available that can meet our production and quality requirements. However, the loss of a supplier could, in the short term, adversely affect our business until alternative supply arrangements are secured.
We purchase our inventory from approximately 60 suppliers, one of which represented more than 10% of purchases during the year ended December 31, 2024. We believe the loss of any one supplier would not have a long-term material adverse effect on our business because there are adequate supplier choices available that can meet our production and quality requirements.
Due to the seasonality of purchases of our products, we generally use a substantial amount of cash or borrowings under our $150.0 million senior secured floating-rate revolving credit facility (the “HBB Facility”) to finance inventory in anticipation of the fall holiday-selling season.
We generally use cash on hand or borrowings under our $125 million senior secured floating-rate revolving credit facility (the “HBB Facility”) to finance inventory over the course of the year in anticipation of the fall holiday-selling season. Patents, Trademarks, Copyrights and Licenses We hold patents and trademarks registered in the U.S. and foreign countries for various products.
Through our total rewards programs, we strive to offer competitive compensation, benefits and services to our full-time employees including, incentive plans, recognition plans, defined contribution plans, healthcare benefits, tax-advantaged spending accounts, employee assistance programs and other programs such as sick leave, paid vacation and holidays.
We carefully monitor compensation and benefits to stay competitive and minimize turnover, helping us attract and retain top talent. Through our total rewards programs, we offer comprehensive compensation packages that include incentive plans, recognition programs, retirement benefits, healthcare, tax-advantaged spending accounts, employee assistance programs, and paid time off for sick leave, vacation, and holidays.
Our commercial products compete globally and have generated a strong position in these markets. 2 Table of Contents Government Regulation Our operations are subject to various laws and regulations administered by federal, state, local and foreign government agencies, including laws and regulations related to health, safety and environmental matters.
Our Hamilton Beach Health ® brand completes primarily in the U.S. with additional operations in Europe. Government Regulation Our operations are subject to various laws and regulations administered by federal, state, local and foreign government agencies, including laws and regulations related to health, safety and environmental matters.
(a steel and chemical production and distribution company), (from June 2020 to August 2021), Vice President, Corporate Administration of Ascent Industries Co. (from prior to 2019 to June 2020) Lawrence K. Workman, Jr. 54 Senior Vice President, General Counsel and Secretary of Hamilton Beach Holding (from July 2021), Vice President, Business Development and Corporate Counsel of Coca-Cola Consolidated, Inc.
(a steel and chemical production and distribution company), (from June 2020 to August 2021), Vice President, Corporate Administration of Ascent Industries Co. (from prior to 2020 to June 2020) 4 Table of Contents
We are committed to achieving the highest standards of legal and ethical conduct, including by protecting the human rights and fair treatment of our employees.
We are unwavering in our commitment to the highest legal and ethical standards, including the protection of human rights and fair treatment for all employees. Our policies—including our Code of Corporate Conduct, compliance guidelines, employment policies, and Human Rights Policy—are designed to uphold this commitment.
There are approximately 500 employees in the United States with about half of those based at our headquarters in Richmond, Virginia, which is home to our product design, development and marketing teams as well as our state-of-the-art test kitchen and UL-certified test laboratory.
In the United States, we employ approximately 500 people, with about two-thirds located at our headquarters in Richmond, Virginia. This facility houses our product design, development and marketing teams, along with a state-of-the-art test kitchen and a UL-certified test laboratory. The majority of our remaining U.S. employees support operations at our distribution centers in Byhalia, Mississippi.
All employees participate in training intended to enhance our awareness of the benefits of a diverse and inclusive workforce, to encourage more meaningful collaboration and to strengthen team effectiveness. 4 Table of Contents Information about our Executive Officers The following table sets forth, as of March 6, 2024, the name, age, current position and principal occupation and employment during the past five years of the Company’s executive officers.
Information about our Executive Officers The following table sets forth, as of February 26, 2025, the name, age, current position and principal occupation and employment during the past five years of the Company’s executive officers. EXECUTIVE OFFICERS OF THE COMPANY Name Age Positions R.
We also license certain of our trademarks to various licensees in categories such as microwave ovens, among others. Sales promotion activities are supported through print and digital marketing vehicles. We promote certain of our innovative products primarily through the use of digital and print advertising.
We market our commercial products under the Hamilton Beach Commercial ® and the Proctor Silex Commercial ® brands. We also license certain of our trademarks to various licensees in categories such as microwave ovens, among others. We continue to expand in the home, health and wellness markets.
We strive to create an environment that attracts, engages and develops the talent necessary to enable our performance and growth, including by offering competitive compensation and benefits, providing attractive professional growth opportunities and insisting that everyone be treated with dignity and respect and be afforded equal opportunity.
Our people are our greatest asset, and we believe they will remain the driving force behind our success for years to come. We are committed to fostering an environment that attracts, engages, and nurtures talent by offering competitive compensation and benefits, creating professional growth opportunities, and ensuring every individual is treated with dignity, respect, and equal opportunity.
Within the framework of our Good Thinking ® culture, we operate as One Team and strive to enrich the lives of our customers and consumers by delivering innovative solutions that improve everyday living, all while having a positive, lasting impact on our people and the communities in which we operate.
We believe this dynamic environment fosters creativity, initiative, engagement, and retention—ultimately driving long-term competitive advantage and value creation. As One Team, guided by our Good Thinking® philosophy, we aim to enrich the lives of our customers and consumers through innovative solutions that enhance everyday life, while making a lasting, positive impact on our employees and the communities we serve.
Our culture is built on and centered around Good Thinking ® , which incorporates teamwork, service and inspired thinking into all areas of our business. We believe that this values-based culture is a core strength that provides the foundation for our working environment and our employees. Good Thinking ® is more than developing new products; it inspires everything we do.
At the heart of our culture is Good Thinking®, a philosophy that embodies teamwork, service, and inspired innovation in every aspect of our business. This values-driven culture is a key strength, shaping our workplace environment and empowering our employees. Good Thinking® extends beyond product innovation—it influences everything we do.
The majority of our revenue and operating profit typically occurs in the second half of the year due to the fall holiday-selling season.
Seasonality and Working Capital The market for small electric household and specialty housewares appliances is fairly steady throughout the year, however our revenue typically increases during the second half of the year and peaks during the fourth quarter due to the fall holiday-selling season.
Talent Acquisition, Development and Retention The long-term success and growth of our business depend in large part on our ability to execute an effective talent strategy that attracts, engages and grows a highly talented and committed workforce capable of enabling and leading our performance.
Talent Acquisition, Development, and Retention The long-term success and growth of our Company largely depends on our ability to attract, engage, and nurture a talented, dedicated workforce that drives performance and innovation. To meet our talent requirements, we focus on strategic recruitment and continually improve our onboarding and employee development programs.
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This acquisition is a key step in growing our Hamilton Beach Health ® business, which empowers people to take control of their health and wellness through innovative solutions.
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Our operations are managed and reported in two operating segments, each of which is a reportable segment for financial reporting purposes: (1) Home and Commercial Products and (2) Health. During the years ended December 31, 2023 and 2022, the Company had one operating and one reportable segment.
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We continue to expand in the home, health and wellness market, selling air purifiers under the Clorox ® and TrueAir ® brands and Brita ® water filtration systems. Our acquisition of HealthBeacon represents a key expansion in our home medical category.
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Home and Commercial Products Our Home and Commercial Products segment includes consumer product revenue, primarily concentrated in North America, consisting of sales of small electric household and specialty housewares appliances to traditional brick and mortar and ecommerce retailers, distributors and directly to the end consumer.
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Prior to the acquisition, we had an existing strategic alliance to sell Hamilton Beach Health ® smart Injection Care Management Systems under our Hamilton Beach Health ® brand. We market our commercial products under the Hamilton Beach Commercial ® and the Proctor Silex Commercial ® brands. We supply private label products on a limited basis.
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Also included in this segment is commercial product revenue consisting of sales of products for restaurants, fast-food chains, bars and hotels. Approximately two-thirds of the Company’s commercial sales are in the United States (“U.S.”) and the remaining is in markets across the globe.
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Patents, Trademarks, Copyrights and Licenses We hold patents and trademarks registered in the United States (“U.S.”) and foreign countries for various products.
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Health Our Health segment includes lease revenue in the U.S. and globally associated with leases of connected devices to specialty pharmacy networks and pharmaceutical companies, as well as licensing revenue associated with agreements which grant customers the right to use software for healthcare management.
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We negotiate the purchases from our foreign suppliers in U.S. dollars. During 2023, we purchased substantially all of our finished products from suppliers in China. We purchase our inventory from approximately 60 suppliers, one of which represented more than 10% of purchases during the year ended December 31, 2023.
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The primary system offered is the Smart Sharps Bin™ from Hamilton Beach Health ® .
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Within this culture, our people are our most valuable resource, and we expect them to remain the key to our success for decades to come.
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Our five largest customers accounted for approximately 65%, 64% and 61% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
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We also recognize the basic human need to feel a sense of inclusion, belonging and meaning. So, we strive to foster an environment in which our people are passionate about our business and our Good Thinking ® culture, have a seat at the table and genuinely believe that they are doing meaningful work.
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The intellectual property of our Hamilton Beach Health ® business is important to the operations of our Health segment. 2 Table of Contents Any unauthorized use of, or third-party claim against, our intellectual property rights could harm our business or our ability to compete in the home, health and wellness markets.
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We believe that employees with diverse backgrounds, experiences and viewpoints bring value to our Company, especially when coupled with a strong culture of trust in which competing ideas are not only allowed but encouraged to emerge. We strongly believe that this type of environment drives discretionary effort, morale, creativity, initiative and retention—and, in turn, long-term competitive advantage and value creation.
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That’s why we strive to cultivate a workplace where our employees are passionate about our mission, have a voice in shaping our future, and find meaning in their work. 3 Table of Contents Diversity of backgrounds, experiences, and perspectives strengthens our Company, especially within a culture of trust where differing ideas are not just welcomed but encouraged.
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Our policies and programs—including our Code of Corporate Conduct and other compliance policies, our employment-related policies and our Human Rights Policy—are designed to support this effort. 3 Table of Contents As of December 31, 2023, we employed approximately 700 employees in four countries—Canada, China, Mexico and the United States, of which approximately 98% were full time and the remaining were part time.
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As of December 31, 2024, we had a workforce of approximately 700 employees across six countries—Canada, China, Mexico, Ireland, Germany, and the United States. About 97% of our employees were full-time, with the remaining working part-time. Roughly 2% of our workforce, all based in Canada, are covered by collective bargaining agreements.
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Approximately 2% of our workforce is covered by collective bargaining agreements, all of whom are based in Canada.
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Overall, we maintain strong and positive employee relations. Occupational Health and Safety Protecting the health and safety of our employees is a top priority. We are dedicated to providing a safe working environment and ensuring that our operations are carried out responsibly, securely, and in compliance with all relevant legal requirements.
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Most of the remaining employees in the United States support the operation of our Byhalia, Mississippi distribution centers. We consider employee relations to be good. Occupational Health and Safety One of our top priorities is protecting the health and safety of our workforce.
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We expect all employees to perform their duties in a way that mitigates risks and protects the well-being of everyone. Our occupational health and safety efforts include maintaining safe equipment and facilities, implementing safety training programs, and enforcing safety procedures. We actively encourage employees to suggest safety improvements, join safety committees, and consistently practice safe behaviors.
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We are committed to maintaining a safe work environment and operating in a safe, secure and responsible manner. We require all of our personnel to perform their work in a manner that complies with legal requirements protecting the safety and health of all persons from unreasonable risks.
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We support employee development through various training opportunities and resources, such as “Hamilton Beach University.” This cross-functional learning program provides employees with a deeper understanding of our company, products, and industry, while also equipping them with the skills needed to adapt to emerging trends and excel in their roles.
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In addition to maintaining property and equipment in safe operating conditions, our occupational health and safety framework includes certain safety training programs and safety-related processes and procedures as we strive to ensure the health and safety of our workforce. Employees are encouraged to initiate safety improvements, participate in safety committees and always reinforce safe behaviors.
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To meet our talent objectives, we utilize key strategies and processes related to recruitment while we remain focused on continuing to strengthen our onboarding and ongoing learning development. We monitor market compensation and benefits to be able to attract, retain and promote employees and reduce turnover and our associated costs.
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To empower our employees to reach their full potential, we offer certain training, learning experiences and resources, such as “Hamilton Beach University”—an ongoing, cross-functional learning program designed not only to help employees learn about our Company, our products and our industry but also to stay abreast of emerging trends and to develop job-specific skills.
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Diversity and Inclusion As an equal opportunity employer, we make decisions without regard to race, color, religion, creed, gender, sexual orientation, gender identity, marital status, national origin, age, veteran status, disability or any other protected class.
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We strive to cultivate diversity of perspective in our workforce and believe teammates with diverse backgrounds, experiences and viewpoints bring value to our organization and improve our Good Thinking ® and, in turn, our decision-making.
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We strive to create a workplace in which employee differences are embraced and competing perspectives are encouraged to emerge, allowing robust collaboration and teamwork to drive better decision making and more favorable results for all stakeholders.
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EXECUTIVE OFFICERS OF THE COMPANY Name Age Positions Gregory H. Trepp 62 Director and Chief Executive Officer of Hamilton Beach Holding (from February 2024), Director, President and Chief Executive Officer of Hamilton Beach Holding (from prior to 2019 to February 2024) R.
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(a Coca-Cola manufacturing and bottling company), (from prior to 2019 to July 2021)

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

62 edited+27 added−5 removed65 unchanged
Biggest changeFrom time to time we are subject to claims involving product liability, infringement of intellectual property and patent rights of third parties and other matters. Any such claims, with or without merit, could be time consuming and expensive, and may require the Company to incur substantial costs and divert the resources of management.
Biggest changeAny such claims, with or without merit, could be time-consuming and expensive, and may require the Company to incur substantial costs and divert the resources of management. We evaluate claims to assess potential losses and establish appropriate reserves based on available information and legal judgment. Due to the uncertainties of litigation, unfavorable rulings could occur.
Over the past several years, the U.S. government has taken a number of trade actions that impact or could impact our operations, including imposing tariffs on certain goods imported into the United States. In addition, several governments, including the European Union, China and India, have imposed tariffs on certain goods imported from the United States.
Over the past several years, the U.S. government has taken a number of trade actions that impact or could impact our operations, including imposing tariffs on certain goods imported into the U.S. In addition, several governments, including the European Union, China and India, have imposed tariffs on certain goods imported from the United States.
Our supply chain is subject to additional risks including, among others: • currency fluctuations; • labor unrest; • potential political, economic or social instability and government restrictions; • restrictions on transfers of funds; • import and export duties and quotas; • changes in domestic and international customs and tariffs, including embargoes and customs restrictions; • uncertainties involving the costs and ability to transport products; • long distance shipping routes dependent upon a small group of shipping and rail carriers and import facilities; • unexpected changes in regulatory environments; • regulatory issues involved in dealing with foreign suppliers and in exporting and importing products; • protection of intellectual property; • difficulty in complying with a variety of foreign laws; • difficulty in obtaining distribution and administrative support; • natural or human induced disasters such as earthquakes, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, power or water shortages, telecommunications failures and medical epidemics or pandemics; and • potentially adverse tax consequences, including significant changes in tax law.
Our supply chain is subject to additional risks including, among others: • currency fluctuations; • labor unrest; • potential political, economic or social instability and government restrictions; • restrictions on transfers of funds; • import and export duties and quotas; • changes in domestic and international customs and tariffs, including embargoes, sanctions and customs restrictions; • uncertainties involving the costs and ability to transport products; • long distance shipping routes dependent upon a small group of shipping and rail carriers and import facilities; • unexpected changes in regulatory environments; • regulatory issues involved in dealing with foreign suppliers and in exporting and importing products; • protection of intellectual property; • difficulty in complying with a variety of foreign laws; • difficulty in obtaining distribution and administrative support; • natural or human induced disasters such as earthquakes, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, power or water shortages, telecommunications failures and medical epidemics or pandemics; and • potentially adverse tax consequences, including significant changes in tax law.
Additionally, in periods of uncertain economic conditions, such as inflation, rising interest rates, recessions or economic slowdowns, our customers may purchase less of our products as they manage their inventory levels to adjust to changes in consumers’ spending habits in response to such economic conditions. These circumstances could adversely impact our revenue and profitability.
Additionally, in periods of uncertain economic conditions, such as tariffs, inflation, rising interest rates, recessions or economic slowdowns, our customers may purchase less of our products as they manage their inventory levels to adjust to changes in consumers’ spending habits in response to such economic conditions. These circumstances could adversely impact our revenue and profitability.
If we do not properly implement and maintain practices and controls with respect to compliance with applicable anti-corruption, anti-bribery and anti-kickback laws, or if we fail to enforce those practices and controls properly, we may be held responsible for their actions and may become subject to regulatory sanctions, including administrative costs related to governmental and internal investigations, civil and criminal penalties, injunctions and restrictions on our business and capital raising activities, any of which could materially and adversely affect our business, results of operations and financial condition.
If we do not properly implement and maintain practices and controls with respect to compliance with applicable anti-corruption, anti-bribery, anti-kickback, and anti-forced labor laws, or if we fail to enforce those practices and controls properly, we may be held responsible for their actions and may become subject to regulatory sanctions, including administrative costs related to governmental and internal investigations, civil and criminal penalties, injunctions and restrictions on our business and capital raising activities, any of which could materially and adversely affect our business, results of operations and financial condition.
Because such family members could prevent other stockholders from exercising significant influence over significant corporate actions, the Company may be a less attractive takeover target, which could adversely affect the market price of its common stock. Item 1B. UNRESOLVED STAFF COMMENTS None. 13 Table of Contents
Because such family members could prevent other stockholders from exercising significant influence over significant corporate actions, the Company may be a less attractive takeover target, which could adversely affect the market price of its common stock. Item 1B. UNRESOLVED STAFF COMMENTS None. 14 Table of Contents
Also, receipt of approval in one country does not guarantee approval by the FDA or any other foreign regulatory agency. 12 Table of Contents U.S. government trade actions could have a material adverse effect on our subsidiaries, financial position, and results of operation.
Also, receipt of approval in one country does not guarantee approval by the FDA or any other foreign regulatory agency. 13 Table of Contents U.S. government trade actions could have a material adverse effect on our subsidiaries, financial position, and results of operation.
Certain transportation industry vendors may experience capacity constraints due to increases in volume, shipping availability, port congestion, labor shortages or other factors. If our transportation industry vendors become capacity constrained, then we may have to identify new vendors or explore alternative order fulfillment methods to ensure we have sufficient shipping capabilities.
Certain transportation industry vendors may experience capacity constraints due to increases in volume, shipping availability, port congestion, port strikes, rail strikes, labor shortages or other factors. If our transportation industry vendors become capacity constrained, then we may have to identify new vendors or explore alternative order fulfillment methods to ensure we have sufficient shipping capabilities.
We sell a substantial quantity of products to mass merchandisers, ecommerce retailers, national department stores, variety store chains, drug store chains, specialty home retailers and other retail outlets. As a result, these retailers generally have a large selection of small electric household and specialty housewares appliance suppliers from which to choose.
We sell a substantial quantity of products to mass merchandisers, ecommerce retailers, national department stores, variety store chains, warehouse clubs, specialty home retailers and other retail outlets. As a result, these retailers generally have a large selection of small electric household and specialty housewares appliance suppliers from which to choose.
As a result, any of these risks could significantly reduce our profitability and our ability to operate our businesses effectively. 10 Table of Contents Our obligations relating to environmental matters may exceed our expectations. We are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances.
As a result, any of these risks could significantly reduce our profitability and our ability to operate our businesses effectively. Our obligations relating to environmental matters may exceed our expectations. We are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances.
The small electric household, specialty housewares appliances and commercial appliance industry does not have substantial entry barriers. As a result, we compete with many manufacturers and distributors of housewares products. Additional competitors may also enter this market and cause competition to intensify.
The small electric household, specialty housewares appliances and commercial appliance industry is highly competitive and does not have substantial entry barriers. As a result, we compete with many manufacturers and distributors of housewares products. Additional competitors may also enter this market and cause competition to intensify.
In particular, product recalls may result in a decline in sales for a particular product. 11 Table of Contents Failure to comply with public health, consumer protection and other regulations could affect our reputation, revenue and profitability. Some jurisdictions require that products be listed by UL, a not-for-profit organization that sets safety standards for products, or other similar recognized laboratories.
In particular, product recalls may result in a decline in sales for a particular product. Failure to comply with public health, consumer protection and other regulations could affect our reputation, revenue and profitability. Some jurisdictions require that products be listed by UL, a not-for-profit organization that sets safety standards for products, or other similar recognized laboratories.
During fiscal 2023, Walmart and Amazon.com accounted for approximately 27% and 24% of our revenue, respectively. Although we have long-established relationships with many customers, including Walmart and Amazon, we do not have any long-term supply contracts with these customers, and purchases are generally made using individual purchase orders.
During fiscal 2024, Walmart and Amazon.com accounted for approximately 29% and 24% of our revenue, respectively. Although we have long-established relationships with many customers, including Walmart and Amazon, we do not have any long-term supply contracts with these customers, and purchases are generally made using individual purchase orders.
As the majority of our products are imported into the United States from China, many of our product lines are subject to the tariffs imposed under Section 301 of U.S. trade law that have been applied to separate lists of Chinese goods imported into the United States, beginning during the Trump Administration and continuing in the Biden Administration.
As the majority of our products are imported into the U.S. from China, many of our product lines are subject to the tariffs imposed under Section 301 of U.S. trade law that have been applied to separate lists of Chinese goods imported into the United States, beginning during the first Trump Administration.
Although we attempt to monitor and mitigate against cyber risks, including through investing in new technologies and developing third-party cybersecurity risk management capabilities, we may incur significant costs in protecting against or remediating cyberattacks or other cyber incidents.
Although we attempt to monitor and mitigate against cybersecurity threats and risks, including through investing in new technologies and developing third-party cybersecurity risk management capabilities, we may incur significant costs in protecting against threats or remediating cybersecurity attacks or other cybersecurity incidents.
Additionally, our exposure to rising interest rates subjects us to increased debt obligations with respect to existing floating rate debt during periods where such rates are in effect. We are subject to foreign currency exchange risk.
Additionally, our exposure to rising interest rates subjects us to increased debt obligations with respect to existing floating rate debt during periods where such rates are in effect. 10 Table of Contents We are subject to foreign currency exchange risk.
Given the significant number of transactions that are completed annually, it is vital to maintain constant operation of computer hardware and software systems and maintain cybersecurity. In addition, we collect, store, have access to and otherwise process certain confidential or sensitive data.
Given the significant number of transactions that are completed annually, it is vital to maintain constant operation of computer hardware and software systems and maintain cybersecurity measures. In addition, we collect, store, have access to and otherwise process a variety of types of data, including personal data and certain confidential or sensitive data.
Hamilton Beach Holding has two classes of common stock: Company Class A common stock (“Class A Common”) and Class B common stock (“Class B Common”). Holders of Class A Common are entitled to cast one vote per share and, as of December 31, 2023, accounted for approximately 22.14% of the voting power of the Company.
Hamilton Beach Holding has two classes of common stock: Company Class A common stock (“Class A Common”) and Class B common stock (“Class B Common”). Holders of Class A Common are entitled to cast one vote per share and, as of December 31, 2024, accounted for approximately 21.6% of the voting power of the Company.
Additionally, unauthorized access could also cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and dealing with local and federal law enforcement. 9 Table of Contents There is no assurance that the measures we have taken to protect our information systems will prevent or limit the impact of a future cyber incident.
Additionally, a cybersecurity incident could also cause interruptions in our operations and might require us to spend significant management time and other resources investigating the event and dealing with local and federal law enforcement. There is no assurance that the measures we have taken to protect our information systems will prevent or limit the impact of cybersecurity threats or incidents.
On the basis of this common stock ownership, certain members of the Company’s extended founding family could exercise 79.56% of the Company’s total voting power.
On the basis of this common stock ownership, certain members of the Company’s extended founding family could exercise 80.5% of the Company’s total voting power.
Sales of our products are related to consumer spending, including general economic conditions affecting disposable consumer income such as unemployment rates, business conditions, inflation rates, interest rates, levels of consumer confidence, energy prices, mortgage rates, the level of consumer debt and taxation.
Sales of our products fluctuate based on consumer spending patterns. Consumer spending patterns are subject to general economic conditions affecting disposable consumer income, such as unemployment rates, business conditions, inflation rates, interest rates, levels of consumer confidence, energy prices, mortgage rates, the level of consumer debt and taxation.
Additionally, as cyber attacks are increasing in frequency, we are vulnerable to a decline in revenue in the event of a cyber attack at any of our key customers.
Additionally, as cybersecurity incidents are increasing in frequency, we are vulnerable to a decline in revenue in the event of cybersecurity incidents at any of our key customers.
Government regulations could impose costly requirements on our business. The FDA and other governmental authorities regulate the development, manufacture, sale and distribution of certain of our products, and failure to comply with all applicable rules and regulations may adversely impact us.
The FDA and other governmental authorities regulate the development, manufacture, sale and distribution of certain of our products, and failure to comply with all applicable rules and regulations may adversely impact us.
In addition, we compete with our retail customers, who use their own private label brands, and importers and foreign manufacturers of unbranded products. Some competitors may be willing to reduce prices and accept lower profit margins to compete.
In addition, we compete with our retail customers, who use their own private label brands, and importers and foreign manufacturers of unbranded products. Some competitors may be willing to reduce prices and accept lower profit margins to compete. As a result of this competition, we could lose market share and revenue.
As a result of this competition, we could lose market share and revenue. 6 Table of Contents Changes in consumer shopping trends and changes in distribution channels could result in lost market share and decreased revenue and profitability. Traditional brick-and-mortar retail channels have experienced low growth or declines in recent years, while the ecommerce channel has experienced significant growth.
Changes in consumer shopping trends and changes in distribution channels could result in lost market share and decreased revenue and profitability. Traditional brick-and-mortar retail channels have experienced low growth or declines in recent years, while the ecommerce channel has experienced significant growth.
Holders of Class B Common are entitled to cast ten votes per share and, as of December 31, 2023, accounted for the remaining voting power of the Company. As of December 31, 2023, certain members of the Company’s extended founding family held approximately 32.34% of Class A Common and 92.99% of Class B Common.
Holders of Class B Common are entitled to cast ten votes per share and, as of December 31, 2024, accounted for the remaining voting power of the Company. As of December 31, 2024, certain members of the Company’s extended founding family held approximately 33.8% of Class A Common and 93.3% of Class B Common.
We are continually evaluating the impact of the current and any possible new tariffs on our supply chain, costs, sales and profitability and are considering strategies to mitigate such impact, including reviewing sourcing options, filing requests for exclusion from the tariffs for certain product lines and working with our suppliers and customers.
We are continually evaluating the impact of the current and any possible new tariffs on our supply chain, costs, sales and profitability and are implementing strategies to mitigate anticipated impact, including reviewing sourcing options and seeking alternate sources of supply in various countries outside of China, filing requests for exclusion from the tariffs for certain product lines and working with our suppliers and customers.
In addition, we may be unable to continually meet the needs of those customers, which could damage our customer relationships and result in reduced new orders. 5 Table of Contents As a result of dependence on key customers, we could experience a material adverse effect on our revenue and profitability if any of the following were to occur: • the insolvency or bankruptcy of any key customer; • a declining market in which customers materially reduce orders or demand lower prices; or • a strike or work stoppage at a key customer facility, which could affect both its suppliers and customers.
As a result of dependence on key customers, we could experience a material adverse effect on our revenue and profitability if any of the following were to occur: • the insolvency or bankruptcy of any key customer; • a declining market in which customers materially reduce orders or demand lower prices; or • a strike or work stoppage at a key customer facility, which could affect both its suppliers and customers.
With the growing trend towards the concentration of the industry and our branded small electric household and specialty housewares appliance sales among fewer retailers, we are increasingly dependent upon fewer customers whose bargaining strength is growing as a result of this concentration.
During fiscal 2024, our five largest customers accounted for a total of approximately 65% of our revenue. With the continuing trend towards the concentration of the industry and our branded small electric household and specialty housewares appliance sales among fewer retailers, we are increasingly dependent upon fewer customers whose bargaining strength is growing as a result of this concentration.
Our information technology systems, some of which are dependent on services provided by third parties, may be vulnerable to damage, interruption or shutdown due to any number of causes outside of our control such as catastrophic events, natural disasters, fires, power outages, systems failures, telecommunications failures, employee error or malfeasance, security breaches, computer viruses or other malicious codes, ransomware, unauthorized access attempts, denial of service attacks, phishing, hacking and other cyberattacks.
Our information technology systems, and the systems of our third-party business partners, may be vulnerable to damage, interruption or shutdown due to any number of causes outside of our control such as catastrophic events, natural disasters, fires, power outages, systems failures, telecommunications failures, employee error or malfeasance, fraud, security breaches, computer viruses or other malicious codes, ransomware, unauthorized access attempts, denial of service attacks, phishing or other social engineering attempts, hacking and other cybersecurity incidents.
If operations at the Byhalia, Mississippi distribution center are disrupted, it could result in a material loss of revenue and additional costs to bring the facility back to full operating capacity. 7 Table of Contents Although we take measures to mitigate the impact of increased product and transportation costs through pricing, if inflationary pressures are sustained, or if pricing strategies are ineffective or are not implemented in a timely manner, we may only be able to recover a portion of our increased costs in future periods which may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Although we take measures to mitigate the impact of increased product and transportation costs through pricing, if inflationary pressures are sustained, or if pricing strategies are ineffective or are not implemented in a timely manner, we may only be able to recover a portion of our increased costs in future periods which may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Given that the majority of our suppliers are based in China, finding suppliers outside of China could result in additional risks, including additional compliance requirements with foreign laws and taxes, obtaining distribution and administrative support and training new personnel. 8 Table of Contents Certain products rely upon a single third-party supplier.
As we take steps to diversify the geographic location of our suppliers, finding suppliers outside of China could result in additional risks, including additional compliance requirements with foreign laws and taxes, obtaining distribution and administrative support and training new personnel. Certain products rely upon a single third-party supplier.
The administration, enforcement and regulation of Privacy Laws are quickly evolving and subject to changes in interpretation. Future changes in Privacy Laws may require the Company to incur additional and unexpected expenses and may subject the Company to additional compliance risk.
Future changes in Privacy Laws may require the Company to incur additional and unexpected expenses and may subject the Company to additional compliance risk.
Declines in consumer spending or a shift in consumer spending away from small electric household and specialty housewares appliances may significantly reduce demand for our products and reduce orders from retailers for our products, which could lead to increased inventories. Additionally, this may result in lower sales volume, higher price concessions and lower gross margins.
Declines in consumer spending or a shift in consumer spending away from small electric household and specialty housewares appliances during certain periods may significantly reduce demand for our products and reduce orders from retailers for our products, which could lead to increased inventories.
Because the primary resource used in plastic is petroleum, the cost and availability of plastic varies to a great extent with the price of petroleum. When the prices of petroleum, as well as steel, aluminum and copper, increase significantly, supplier price increases may materially reduce our profitability if we are unable to pass price increases on to our customers.
When the prices of petroleum, as well as steel, aluminum and copper, increase significantly, supplier price increases may materially reduce our profitability if we are unable to pass price increases on to our customers.
The foregoing factors could have a material adverse effect on our ability to maintain or increase the supply of products, which may result in material increases in our expenses and decreases in our revenue and profitability.
The foregoing factors could have a material adverse effect on our ability to maintain or increase the supply of products, which may result in material increases in our expenses and decreases in our revenue and profitability. While our suppliers are primarily located in the Asia-Pacific region, approximately three-fourths of our suppliers are currently based in China.
Cyber attacks are becoming more sophisticated and include computer viruses or other malicious codes, attacks to gain unauthorized access to data and other security breaches that could lead to the loss of valuable business data, misappropriation of our consumers’ or employees’ personal information or a disruption of our critical systems.
Such a loss or delay could reduce demand and cause our sales and/or profitability to decline. 9 Table of Contents Cybersecurity attacks include computer viruses or other malicious codes, attacks to gain unauthorized access to data and other security breaches that could lead to the loss of valuable business data, misappropriation of our consumers’ or employees’ personal information or a disruption of our critical systems.
The acquisition of a business, or of the rights to market specific products or use specific product names, may involve a financial commitment by us, either in the form of cash or stock consideration. We may not be able to acquire businesses and develop products that will contribute positively to our earnings.
We may acquire partial or full ownership in businesses or may acquire rights to market and distribute particular products or lines of products. The acquisition of a business, or of the rights to market specific products or use specific product names, may involve a financial commitment by us, either in the form of cash or stock consideration.
To the extent that we rely on newly acquired businesses or new product lines to expand our business, these acquisitions or new product lines may not contribute positively to our earnings because anticipated sales volumes and synergies may not materialize, cost savings may be less than expected or acquired businesses may carry unexpected liabilities.
Additionally, if we are unable to source inventory at the correct levels in time with our customers’ orders, we could lose sales and experience a reduction in revenue. 8 Table of Contents To the extent that we rely on newly acquired businesses or new product lines to expand our business, these acquisitions or new product lines may not contribute positively to our earnings because anticipated sales volumes and synergies may not materialize, cost savings may be less than expected or acquired businesses may carry unexpected liabilities.
Due to the uncertainties of litigation, unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the Company’s financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods.
If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the Company’s reputation, financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods. 11 Table of Contents Our intellectual property rights could be infringed and adverse events regarding licensed intellectual property could harm our business.
If our key customers’ websites or systems are disrupted for a considerable amount of time, whether due to a cyber attack or other disruption, we could experience lost sales to consumers and the key customers’ inability to submit new purchase orders, which could result in reduced revenue and profitability.
If our key customers’ websites or systems are disrupted for a considerable amount of time, whether due to a cybersecurity incident or other disruption, we could experience lost sales to consumers and the key customers’ inability to submit new purchase orders, which could result in reduced revenue and profitability. 5 Table of Contents The concentration of our branded small electric household and specialty housewares appliance sales among a few retailers and the trend toward private label brands could materially reduce revenue and profitability.
Compliance with multiple, and potentially conflicting, international laws and regulations, including anti-corruption laws, may be difficult, burdensome or expensive. We are subject to many statutes, ordinances, rules and regulations in the U.S. and elsewhere that, if violated by us or our affiliates, partners or vendors, could have a material adverse effect on our business.
We are subject to many statutes, ordinances, rules and regulations in the U.S., Canada, Mexico, Europe and other countries in which we conduct business that, if violated by us or our affiliates, partners or vendors, could have a material adverse effect on our business.
Any material disruption or slowdown of our systems, including our failure to successfully upgrade systems, could cause information, including data related to customer orders, to be lost or delayed. Such a loss or delay could reduce demand and cause our sales and/or profitability to decline.
Any material disruption or slowdown of our systems, or the systems of our third-party business partners, including failure to successfully upgrade systems, could cause information, including data related to customer orders, to be lost, corrupted, altered or delayed.
Additionally, the increase in hybrid working where employees, including third-party employees, access technology infrastructure remotely may create additional information technology and data security risks.If our systems are damaged, or fail to function properly, we may have to make monetary investments to repair or replace the systems and could endure delays in operations.
If our systems are damaged, or fail to function properly, we may have to make monetary investments to repair or replace the systems and could endure delays in operations.
Failure to obtain anticipated orders or delays or cancellations of orders or significant pressure to reduce prices from key customers could impair our ability to sustain or grow our business.
Failure to obtain anticipated orders or delays or cancellations of orders or significant pressure to reduce prices from key customers could impair our ability to sustain or grow our business. In addition, we may be unable to continually meet the needs of those customers, which could damage our customer relationships and result in reduced new orders.
Any failure to comply with Privacy Laws could have a material adverse impact on our financial condition and results of operations. Financial Risks Our financing arrangements contain various restrictions that could limit operating flexibility.
Failure to comply with personal data protection and privacy laws could have a material adverse effect on our business, financial condition and results of operations.
If unauthorized access does occur, we could also become the subject of regulatory action or litigation from our customers, employees, suppliers and shareholders, which could damage our reputation, require significant expenditures of capital and cause us to lose business and revenue.
Further, if a cybersecurity threat or cybersecurity incident has a material adverse effect on our systems, or the systems of our third-party business partners, we could become the subject of regulatory action, sanctions or fines, or litigation from our customers, employees, suppliers and shareholders, administrative, civil or criminal investigations or actions and remediation costs, which could damage our reputation, require significant expenditures of capital and cause us to lose business and revenue.
Our ability to raise prices to reflect increased costs may also be limited by competitive conditions in the market for our products.
Our ability to raise prices to reflect increased costs may also be limited by competitive conditions in the market for our products. Substantial disruptions at any of our distribution centers could have an adverse effect on our business, operating results and financial condition.
The Section 301 tariffs on goods covered by lists 1, 2, 3 and 4a affect approximately 25% of our total purchases on an annualized basis. To date, the Biden Administration has effectively maintained and has continued to defend and to enforce these particular trade actions.
The Section 301 tariffs on goods covered by lists 1, 2, 3 and 4a affect approximately 40% of our total purchases on an annualized basis. The second Trump Administration has announced new changes to the U.S. government’s tariff policy, including new tariffs on China, Canada and Mexico.
Therefore, our success also depends upon our ability to recruit, hire, train and retain current and additional skilled and experienced management personnel. Our inability to hire and retain personnel with the requisite skills could impair our ability to manage and operate our consolidated business effectively and could significantly reduce our consolidated profitability.
Our inability to hire and retain personnel with the requisite skills, or to effectively transfer knowledge when key employees depart, could impair our ability to develop new products, protect our proprietary information, manage and operate our consolidated business effectively and could significantly reduce our consolidated profitability.
Under the FCPA, companies operating in the U.S. may be held liable for actions taken by their strategic or local partners or representatives.
Under the FCPA, companies operating in the U.S. may be held liable for actions taken by their strategic or local partners or representatives. Additionally, we are required to comply with the Uyghur Forced Labor Prevention Act (“UFLPA”) which has requirements to prevent forced labor, particularly from the Xinjiang Uyghur Autonomous Region (XUAR) of China.
There are several possibilities that could cause a disruption to our distribution network such as, fires, floods, loss of power, severe weather, impacts from climate change, labor shortages, equipment failures and lack of access to equipment. For example, our U.S. distribution center located in Byhalia, Mississippi is located in a geographic area that is subject to greater risk of tornados.
There are several possibilities that could cause a disruption to our distribution network, including but not limited to, acts of God, severe weather, impacts from climate change, labor shortages, equipment failures and lack of access to equipment, or cybersecurity incidents.
Anticipated synergies may not materialize, cost savings may be less than expected, sales of products may not meet expectations or acquired businesses may carry unexpected liabilities. We depend on third-party suppliers for all of our products, which subjects the Company to risks, including unanticipated increases in expenses, decreases in revenue and disruptions in the supply chain.
We may not be able to acquire businesses and develop products that will contribute positively to our earnings. Anticipated synergies may not materialize, cost savings may be less than expected, sales of products may not meet expectations or acquired businesses may carry unexpected liabilities.
Our business could suffer if information technology systems are disrupted, cease to operate effectively or become subject to a cybersecurity breach.
Labor market conditions may impact our ability to attract and retain qualified talent for key roles, which could impede our ability to execute certain strategic initiatives. Our business could suffer if information technology systems are disrupted, cease to operate effectively or become subject to a cybersecurity incident.
Factors that are largely beyond our control, such as inflation and commodity prices for the raw materials needed by suppliers of our products, may affect the cost of products. Historically, the costs of our products have fluctuated due to cost pressures resulting from economic conditions. As an example, our products require a substantial amount of plastic.
Historically, the costs of our products have fluctuated due to cost pressures resulting from economic conditions. As an example, our products require a substantial amount of plastic. Because the primary resource used in plastic is petroleum, the cost and availability of plastic varies to a great extent with the price of petroleum.
While we have not experienced any material impacts from a cyber attack, any one or more future cyber attacks could have a material adverse effect on our financial condition and results of operations. Failure to maintain data privacy could have a material adverse effect on our business, financial condition and results of operations.
While we are not aware of any cybersecurity incidents that have occurred since the beginning of 2024 that have materially affected, or are reasonably likely to materially affect us, including our results of operations or financial condition, any one or more future cybersecurity incidents could have a material adverse effect on our financial condition or results of operations.
We have invested in industry-leading selling and marketing capabilities, while maintaining our presence in traditional brick-and-mortar retail channels. However, if we are not successful in utilizing ecommerce channels that consumers may prefer, we may experience a loss in market share and decreased revenue and profitability.
We have invested significant resources in our selling and marketing capabilities, while maintaining our presence in traditional brick-and-mortar retail channels.
Accordingly, quarter-to-quarter comparisons of our past operating results are meaningful only when comparing equivalent time periods, if at all. Business Risks Uncertain or unfavorable global economic conditions may have an adverse effect on our business, operating results and financial condition.
Similarly, our revenue typically increases during the second half of the year and peaks during the fourth quarter due to the fall holiday-selling season. Accordingly, quarter-to-quarter comparisons of our past operating results are meaningful only when comparing equivalent time periods, if at all. Business Risks Increases in costs of products may materially reduce our profitability.
The markets for our products are highly seasonal and dependent on consumer spending, which could result in significant variations in revenue and profitability.
However, if we are not successful in utilizing ecommerce channels that consumers may prefer, we may experience a loss in market share and decreased revenue and profitability. 6 Table of Contents The markets for our products are dependent on consumer spending and typically peak in the fourth quarter, which could result in significant variations in revenue and profitability.
Additionally, we have strategic alliances and licensing agreements with third-party brands, and our success also relies upon the reputation of these third-party brands. Failure to maintain our reputation and brand image could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Failure to maintain our reputation and brand image through any of these factors, including product quality issues, recalls, or negative public perception, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Financial Risks Our financing arrangements contain various restrictions that could limit operating flexibility.
We endeavor to design our products to meet the certification requirements of, and to be certified in, each of the jurisdictions in which they are sold. Failure to comply with such certification requirements could result in additional re-design expenses, fines, or product liability claims. The Company’s good reputation is critical to the success of our business.
We endeavor to design our products to meet the certification requirements of, and to be certified in, each of the jurisdictions in which they are sold. Some jurisdictions have begun to require labeling of products that contain per- and polyfluoroalkyl substances (PFAS) which leads to additional costs and efforts.
Our business has in the past been, and may continue to be, adversely affected by changes in global economic conditions including inflation, rising interest rates, consumer spending rates, availability and costs of raw materials and availability of capital markets and impacts from global military conflicts.
Our business has in the past been, and may continue to be, adversely affected by factors that are largely beyond our control, such as tariffs, inflation and commodity prices for the raw materials needed by suppliers of our products, as well as transportation, labor costs and availability.
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The increasing concentration of our branded small electric household and specialty housewares appliance sales among a few retailers and the trend toward private label brands could materially reduce revenue and profitability. During fiscal 2023, our five largest customers accounted for a total of approximately 64% of our revenue.
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Additionally, prolonged periods of lower consumer spending may result in lower sales volume, higher price concessions and lower gross margins. In addition, the retail market for small electric household and specialty housewares appliances is fairly steady throughout the year, but peaks during the fourth quarter due to the fall holiday-selling season.
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In addition, the retail market for small electric household and specialty housewares appliances is highly seasonal in nature. Accordingly, we generally recognize a substantial portion of our revenue in the second half of the year as sales increase significantly with the fall holiday-selling season.
Added
These factors may affect the cost of our products, and we may not be able to pass those costs on to our customers. Periods of inflation, rising interest rates, and shifts in consumer spending could cause the insolvency or bankruptcy of certain retail customers, which may result in material decreases in our revenue and profitability.
Removed
We may acquire partial or full ownership in businesses or may acquire rights to market and distribute particular products or lines of products. For example, in February 2024, our Hamilton Beach Health ® business acquired HealthBeacon, a developer of connected devices that enable patients to manage their injectable medication regimens at home.
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We have business continuity plans in place, however if we are unable to restore operations in a timely manner, it could result in a material loss of revenue and additional costs to bring the facility back to full operating capacity.
Removed
Additionally, if we are unable to source inventory at the correct levels in time with our customers’ orders, we could lose sales and experience a reduction in revenue. We may not be able to attract, retain and develop key talent. Employment and retention of qualified personnel is important to the successful conduct of our business.
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Alternative facilities with sufficient capacity may not be available, may cost substantially more than existing facilities, or may take significant time to become operational, which could further impact our business and financial performance. 7 Table of Contents We depend on third-party suppliers, primarily located in the Asia-Pacific region, for all of our products, which subjects the Company to risks, including unanticipated increases in expenses, decreases in revenue and disruptions in the supply chain.
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For example, we are required to comply with the U.S.
Added
Our expansion into the health and wellness market may result in unexpected challenges and inefficiencies, which could have an adverse effect on our business, operating results and financial condition.
Added
Our ability to successfully expand into the health and wellness market is dependent upon several factors, including our ability to attract new customers and retain existing customers, provide customers with high-quality support, and enter into strategic partnerships with pharmaceutical and specialty pharmacy companies.
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In addition, for certain products in our Hamilton Beach Health® business, we may be subject to detailed laws and regulations regarding, among other matters, research and development, clinical investigations, product approvals and manufacturing, marketing and promotion, sampling, distribution, record-keeping, storage and disposal practices, and we may face additional compliance costs and unexpected challenges in complying with these laws and regulations.
Added
If we are unable to successfully navigate market dynamics, regulatory requirements and the competitive landscape in the health and wellness market, we may incur additional costs, which could have an adverse effect on our business, operating results and financial condition. Our ability to attract, retain and develop key talent is crucial to our results of operations and future growth.
Added
Employment and retention of qualified personnel, particularly senior management and skilled professionals with experience in our business, operations, engineering, technology and industry, is important to the successful conduct of our business.
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Our success depends upon our ability to recruit, hire, train and retain current and additional skilled and experienced personnel in a challenging labor market that may require increased wage costs.
Added
Cybersecurity threat bad actors also may attempt to exploit vulnerabilities in software that is commonly used by companies in cloud-based services and bundled software. Additionally, the increase in hybrid working where employees, including third-party employees, access technology infrastructure remotely may create additional information technology and data security risks.
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We are in the process of implementing the enterprise resource planning (“ERP”) system which was previously installed in the U.S. at our Canada subsidiary.
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Any significant disruption, delay or deficiency in the design and implementation of the ERP system could adversely affect our ability to process orders, ship products, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, we have a Cyber Security Task Force in place that is comprised of individuals across our various departments within our organization including information systems, legal, finance, internal audit, sales and marketing, engineering and supply chain teams which meets regularly to further advance our cybersecurity strategy. 14 Table of Contents
Biggest changeAdditionally, we have a Cyber Security Task Force in place to support our VP, IT Business Solutions that is comprised of individuals across our various departments within our organization including information systems, legal, finance, internal audit, sales and marketing, engineering and supply chain teams which meets regularly to further advance our cybersecurity strategy. 15 Table of Contents
On an ongoing basis we utilize threat prevention systems to monitor, block and protect our information technology systems which are monitored continuously by trained security personnel. Our process to prevent cybersecurity incidents involves layered security architecture to protect our networks, end-user devices, servers, and cloud solutions.
On an ongoing basis we utilize threat prevention systems to monitor, block and protect our information technology systems which are monitored continuously by trained security personnel. Our process to prevent cybersecurity incidents involves layered security architecture designed to protect our networks, end-user devices, servers, and cloud solutions.
Our cybersecurity risk management processes are led by our VP, IT Business Solutions who has over 22 years of experience in various roles involving managing information systems and cybersecurity functions and developing cybersecurity strategies.
Our cybersecurity risk management processes are led by our VP, IT Business Solutions who has over 23 years of experience in various roles involving managing information systems and cybersecurity functions and developing cybersecurity strategies.
Our Audit Review Committee plays a vital role in our cybersecurity risk management process and regularly reviews the Company’s cybersecurity and other information technology risks, controls and procedures. At multiple points throughout the year, management provides the Audit Review Committee with updates to our cybersecurity risk management process and our security monitoring and protection systems.
Our Audit Review Committee plays a vital role in our cybersecurity risk management process and regularly reviews the Company’s cybersecurity and other information technology risks, controls and procedures. Throughout the year, management provides the Audit Review Committee with updates to our cybersecurity risk management process and our security monitoring and protection systems.
Through these roles the VP, IT Business Solutions has implemented information technology security and privacy policies across multiple infrastructure and application platforms and led identity and access management. In order to enable the Company to prevent, detect, mitigate and remediate cybersecurity incidents, our security monitoring and protection systems are continuously monitored.
Through these roles the VP, IT Business Solutions has implemented information technology security and privacy policies across multiple infrastructure and application platforms as well as identity and access management enhancements. In order to enable the Company to prevent, detect, mitigate and remediate cybersecurity incidents, our security monitoring and protection systems are continuously monitored.
We describe whether any risks from cybersecurity threats, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “The Company’s business could suffer if information technology systems are disrupted, cease to operate effectively or become subject to a cybersecurity breach” included within our risk factor disclosures in Item 1A.
We describe whether any risks from cybersecurity threats, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “Our business could suffer if information technology systems are disrupted, cease to operate effectively or become subject to a cybersecurity incident.” included within our risk factor disclosures in Item 1A.
As of the filing of this Form 10-K, we are not aware of any cyber attacks that have occurred since the beginning of 2023 that have materially affected, or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
As of the filing of this Form 10-K, we are not aware of any cybersecurity incidents that have occurred since the beginning of 2024 that have materially affected, or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
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However, this does not mean that the Company, or our third-party service providers, will meet, or maintain, any particular technical standard, specification, or requirement in the future, but rather we use these standards as a guide to help us identify, assess and manage cybersecurity risks and threats relevant to our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES The following table presents the principal distribution and office facilities owned or leased: Owned/ Facility Location Leased Function(s) (3) Glen Allen, Virginia Leased Corporate headquarters Geel, Belgium (1) Distribution center Shenzhen, People’s Republic of China (1) Distribution center Mexico City, Mexico Leased Mexico sales and administrative headquarters Belleville, Ontario, Canada Leased Distribution center Southern Pines, North Carolina Owned Service center for customer returns; parts distribution center; call center Shenzhen, People’s Republic of China Leased Administrative office Markham, Ontario, Canada Leased Canada sales and administration headquarters Shanghai, People’s Republic of China Leased Sales office Tultitlan, Mexico (1) Distribution center Byhalia, Mississippi Leased Distribution centers (2) (1) This facility is not owned or leased by HBB.
Biggest changePROPERTIES The following table presents the principal distribution and office facilities owned or leased: Segment (use is indicated by ‘X’) Home and Commercial Products Health Facility Location Owned/Leased Function(s) (3) X X Glen Allen, Virginia Leased Global headquarters X Geel, Belgium (1) Distribution center X Shenzhen, People’s Republic of China (1) Distribution center X Mexico City, Mexico Leased Mexico sales and administrative headquarters X Belleville, Ontario, Canada Leased Distribution center X X Southern Pines, North Carolina Owned Service center for customer returns; distribution center; call center X Shenzhen, People’s Republic of China Leased Administrative office X Markham, Ontario, Canada Leased Canada sales and administration headquarters X Tultitlan, Mexico (1) Distribution center X Byhalia, Mississippi Leased Distribution centers (2) X Dublin, Ireland Leased Sales and administration headquarters (1) This facility is not owned or leased by HBB.
This facility is managed by a third-party distribution provider. (2) The Company leases two distribution facilities in Byhalia, Mississippi (3) Sales offices are also leased in several cities in the U.S., Canada and Mexico.
This facility is managed by a third-party distribution provider. (2) The Company leases two distribution facilities in Byhalia, Mississippi. (3) Sales and distribution offices are also leased in several cities in the U.S. and China.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the fourth quarter of 2023, we repurchased 111,123 shares for an aggregate purchase price of $1.6 million. 15 Table of Contents Issuer Purchases of Equity Securities (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of the Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program Month #1 October 1 to 31, 2023 19,769 $ 12.14 19,769 $ 20,310,913 Month #2 November 1 to 30, 2023 44,800 $ 13.99 44,800 $ 19,684,324 Month #3 December 1 to 31, 2023 46,554 $ 15.83 46,554 $ 18,947,187 111,123 $ 14.43 111,123 $ 18,947,187 Item 6.
Biggest changeIssuer Purchases of Equity Securities (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of the Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program Month #1 October 1 to 31, 2024 33,781 $ 29.49 33,781 $ 14,693,346 Month #2 November 1 to 30, 2024 94,591 $ 21.95 94,591 $ 12,617,363 Month #3 December 1 to 31, 2024 68,268 $ 17.12 68,268 $ 11,448,823 196,640 $ 21.57 196,640 $ 11,448,823 (1) Average price paid per share includes costs associated with the repurchases but excludes the 1% excise tax on stock repurchases imposed by the Inflation Reduction Act of 2022.
During 2023, there were no material adjustments to the aforesaid estimates and our past results of operations have not been materially affected by a change in these estimates. Although there can be no assurances, we are not aware of any circumstances that would be reasonably likely to materially change these estimates in the future.
During 2024, there were no material adjustments to the aforesaid estimates and our past results of operations have not been materially affected by a change in these estimates. Although there can be no assurances, we are not aware of any circumstances that would be reasonably likely to materially change these estimates in the future.
A discussion of our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
A discussion of our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is included in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
The following discussion and analysis focuses on our financial results for the years ended December 31, 2023 and 2022 and year-to-year comparisons between these years.
The following discussion and analysis focuses on our financial results for the years ended December 31, 2024 and 2023 and year-to-year comparisons between these years.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers In November 2023, our Board approved a stock repurchase program for the purchase of up to $25 million of our Class A Common outstanding starting January 1, 2024 and ending December 31, 2025.
As of February 21, 2025, there were 700 Class A Common stockholders of record and 726 Class B Common stockholders of record. 16 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers In November 2023, our Board approved a stock repurchase program for the purchase of up to $25 million of our Class A Common outstanding starting January 1, 2024 and ending December 31, 2025.
During the years ended December 31, 2023 and 2022, we repurchased 250,772 and 261,049 shares for an aggregate purchase price of $3.1 million and $3.0 million, respectively. There were no share repurchases during the year ended December 31, 2021.
During the years ended December 31, 2024, 2023 and 2022, we repurchased 638,381, 250,772 and 261,049 shares for an aggregate purchase price of $13.5 million (excluding the 1% excise tax as a result of the Inflation Reduction Act of 2022), $3.1 million and $3.0 million, respectively.
Removed
As of March 1, 2024, there were 773 Class A Common stockholders of record and 746 Class B Common stockholders of record.
Added
This program replaced the previous stock repurchase plan that started February 22, 2022 and ended December 31, 2023.
Removed
Our previously authorized share buyback program was approved by our Board in February 2022 for the purchase of up to $25 million of our Class A Common outstanding starting February 22, 2022 and ending December 31, 2023.
Added
During the fourth quarter of 2024, we repurchased 196,640 shares for an aggregate purchase price of $4.2 million. Additionally, during the year ended December 31, 2024, the Company withheld shares for tax payments due upon issuance of stock to employees under the Executive Long-Term Equity Incentive Compensation Plan (the “Incentive Plan”).
Removed
Retirement Benefit Plans: We maintain two defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. Our policy is to periodically make contributions to fund the defined benefit pension plans within the range allowed by applicable regulations. The defined benefit pension plan assets consist primarily of government and corporate bonds.
Added
During the year ended December 31, 2024, the Company repurchased 30,404 shares for an aggregate purchase price of $0.6 million pursuant to the Incentive Plan.
Removed
There is no guarantee the actual return on the plans’ assets will equal the expected long-term rate of return on plan assets or that the plans will not incur investment losses. 17 Table of Contents Item 7.
Added
The total combined share repurchases from the stock repurchase program and the Incentive Plan during the year ended December 31, 2024, was 668,785 shares for an aggregate purchase price of $14.1 million (excluding the 1% excise tax as a result of the Inflation Reduction Act of 2022).
Removed
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Historically, we employed a total return on investment approach whereby a mix of equities and fixed income investments were used to maximize the long-term return of plan assets for a prudent level of risk.
Added
Item 6. [RESERVED] 17 Table of Contents Item 7.
Removed
During 2022, our Board approved the termination of our U.S. defined benefit pension plan (the “Plan”) with an effective date of September 30, 2022. The termination process is still ongoing and is expected to be completed in 2024.
Added
Deferred Taxes: We determine deferred tax assets and/or liabilities by multiplying the differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled if there is no change in law.
Removed
In light of the Plan termination process, volatility in the market and the funding status, the Plan transferred a significant portion of its assets to lower risk investments in 2022 to move towards a liability driven investing strategy whereby the assets are primarily fixed income investments.
Added
The effect on deferred taxes of a change in tax rates is recognized in net income in the period that includes the enactment date. Valuation allowances on deferred tax assets are estimated based on our assessment of the realizability of such amounts. 18 Table of Contents
Removed
The fixed income investments that were chosen under this strategy, while not precisely the same, are meant to parallel the investments selected in determining the discount rate used to calculate our pension liability. For the Non-U.S.
Removed
Plan, the expected long-term rate of return on defined benefit plan assets reflects our expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations.
Removed
In establishing the expected long-term rate of return assumption for plan assets, we consider the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return.
Removed
The historical and forward-looking rates of return are used to determine our estimated rate of return assumption. Expected returns for the U.S. pension plan are based on a calculated market-related value for U.S. pension plan assets. Expected returns for the non-U.S. pension plan are based on fair market value for non-U.S. pension plan assets.
Removed
Under this methodology, asset gains and losses resulting from actual returns that differ from our expected returns which are recognized ratably in the market-related value of assets over three years.
Removed
The basis for the selection of the discount rate for each plan is determined by matching the timing of the payment of the expected obligations under the defined benefit plans against the corresponding yield of high-quality corporate bonds of equivalent maturities.
Removed
Changes to the estimate of any of these factors could result in a change to our pension obligation causing a related increase or decrease in reported net operating results in the period of change in the estimate.
Removed
Because the 2023 assumptions are used to calculate 2024 pension expense amounts, a one percentage-point change in the expected long-term rate of return on plan assets would result in a change in pension expense for 2024 of approximately $0.3 million for the plans.
Removed
A one percentage-point change in the discount rate would result in a change in pension expense for 2024 of less than $0.1 million.
Removed
A one percentage-point increase in the discount rate would have lowered the plans’ projected benefit obligation as of the end of 2023 by approximately $1.0 million; while a one percentage-point decrease in the discount rate would have raised the plans’ projected benefit obligation as of the end of 2023 by approximately $1.1 million. 18 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. RESERVED 16 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 17 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 24 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 24 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 24
Biggest changeItem 6. RESERVED 17 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 24 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 24 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) RESULTS OF OPERATIONS Our results of operations were as follows for the years ended December 31: 2023 Compared with 2022 Year Ended December 31 2023 % of Revenue 2022 % of Revenue $ Change % Change Revenue $ 625,625 100.0 % $ 640,949 100.0 % $ (15,324) (2.4) % Cost of sales 481,949 77.0 % 511,835 79.9 % (29,886) (5.8) % Gross profit 143,676 23.0 % 129,114 20.1 % 14,562 11.3 % Selling, general and administrative expenses 108,395 17.3 % 90,120 14.1 % 18,275 20.3 % Amortization of intangible assets 200 — % 200 — % — — % Operating profit (loss) 35,081 5.6 % 38,794 6.1 % (3,713) (9.6) % Interest expense, net 3,000 0.5 % 4,589 0.7 % (1,589) (34.6) % Other expense (income), net 385 0.1 % 1,776 0.3 % (1,391) (78.3) % Income (loss) before income taxes 31,696 5.1 % 32,429 5.1 % (733) (2.3) % Income tax expense 6,454 1.0 % 7,162 1.1 % (708) (9.9) % Net income (loss) 25,242 4.0 % 25,267 3.9 % (25) (0.1) % Effective income tax rate 20.4 % 22.1 % The following table identifies the components of the change in revenue for 2023 compared with 2022: Revenue 2022 $ 640,949 (Decrease) increase from: Unit volume and product mix 9,527 Foreign currency 3,254 Average sales price (28,105) 2023 $ 625,625 Revenue - Revenue decreased $15.3 million, or 2.4% over the prior year due primarily to lower average selling price.
Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) RESULTS OF OPERATIONS Our results of operations were as follows for the years ended December 31: 2024 Compared with 2023 Year Ended December 31 2024 % of Revenue 2023 % of Revenue $ Change % Change Revenue $ 654,693 100.0 % $ 625,625 100.0 % $ 29,068 4.6 % Cost of sales 484,486 74.0 % 481,949 77.0 % 2,537 0.5 % Gross profit 170,207 26.0 % 143,676 23.0 % 26,531 18.5 % Selling, general and administrative expenses 126,703 19.4 % 108,395 17.3 % 18,308 16.9 % Amortization of intangible assets 302 — % 200 — % 102 51.0 % Operating profit 43,202 6.6 % 35,081 5.6 % 8,121 23.1 % Interest expense, net 613 0.1 % 3,000 0.5 % (2,387) (79.6) % Pension termination expense 7,611 1.2 % — — % 7,611 n/m Other expense (income), net 1,602 0.2 % 385 0.1 % 1,217 316.1 % Income before income taxes 33,376 5.1 % 31,696 5.1 % 1,680 5.3 % Income tax expense 2,617 0.4 % 6,454 1.0 % (3,837) (59.5) % Net income $ 30,759 4.7 % $ 25,242 4.0 % $ 5,517 21.9 % n/m = not meaningful Effective income tax rate 7.8 % 20.4 % The following table identifies the components of the change in revenue for 2024 compared with 2023: Revenue 2023 $ 625,625 Increase (decrease) from: Unit volume and product mix 62,530 Foreign currency (2,903) Average sales price (30,559) 2024 $ 654,693 Revenue - Revenue increased $29.1 million, or 4.6% compared to the prior year due to increased unit volume and a more favorable product mix, primarily driven by the North America Consumer markets.
We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next 12 months and for the foreseeable future.
We believe our liquidity and access to capital markets will be adequate to fund our cash requirements for the next twelve months and for the foreseeable future.
The Company has no economic interest in a supplier’s decision to sell one or more of its payment obligations. The Company’s rights and obligations with respect to such payment obligations, including amounts due and scheduled payment terms, are not impacted by suppliers’ decisions to sell amounts under these arrangements.
The Company has no economic interest in a supplier’s decision to sell one or more of its payment obligations. The Company’s rights and obligations with respect to such payment obligations, including amounts due and scheduled payment terms, are not impacted by suppliers’ decisions to sell amounts under these arrangements. The agreement has a limit of $65.0 million in payment obligations.
An event of default, as defined in the HBB Facility and in our operating and finance lease agreements, could cause an acceleration of the payment schedule. No such event of default for us has occurred or is anticipated to occur.
An event of default, as defined in the HBB Facility and in our operating and finance lease agreements, could cause an acceleration of the payment schedule. No such event of default for us has occurred or is anticipated to occur. 22 Table of Contents Item 7.
Our primary use of funds consists of working capital requirements, operating expenses, payment of dividends, repurchase of shares, capital expenditures and payments of principal and interest on debt. As of December 31, 2023, we had cash and cash equivalents of $15.4 million, compared to $0.9 million as of December 31, 2022.
Our primary use of funds consists of working capital requirements, operating expenses, payment of dividends, repurchase of shares, capital expenditures, payments of principal and interest on debt and acquisitions. As of December 31, 2024, we had cash and cash equivalents of $45.6 million, compared to $15.4 million as of December 31, 2023.
A 0.25% increase in the base rate would increase our estimated total annual interest payments on the HBB Facility by approximately $0.3 million. Our purchase and other obligations are primarily for accounts payable, open purchase orders and accrued payroll and incentive compensation.
A 0.25% increase in the Base Rate would increase our estimated total annual interest payments on the HBB Facility by approximately $0.6 million. Variable interest payments could change in the event HBB decides to make voluntary repayments. Our purchase and other obligations are primarily for accounts payable, open purchase orders and accrued payroll and incentive compensation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) FORWARD-LOOKING STATEMENTS The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act.
FORWARD-LOOKING STATEMENTS The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act.
Gross profit - Gross profit margin increased to 23.0% in the current year compared to 20.1% in the prior year due to lower product costs and favorable product mix.
Gross profit - Gross profit margin increased to 26.0% in the current year compared to 23.0% in the prior year primarily due to lower product and transportation costs and a favorable product mix. 19 Table of Contents Item 7.
Our participation has not had a material impact on our Consolidated Balance Sheets, Statement of Cash Flows or liquidity.
Therefore, we do not face a material risk if any party terminates the agreement. Our participation has not had a material impact on our Consolidated Balance Sheets, Statement of Cash Flows or liquidity.
The agreement has a limit of $60.0 million in payment obligations ($85.0 million during peak season from August to January). There is no requirement to provide assets pledged as security or other forms of guarantees under the agreement. The Company pays the third-party administrator based upon the original payment terms negotiated with participating suppliers.
There is no requirement to provide assets pledged as security or other forms of guarantees under the agreement. The Company pays the third-party administrator based upon the original payment terms negotiated with participating suppliers. The payment of these obligations by the Company is included in cash used in operating activities in the Consolidated Statement of Cash Flows.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Other expense (income), net - Other expense (income), net decreased $1.4 million.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Selling, general and administrative expenses - Selling, general and administrative expenses increased $18.3 million compared to 2023.
As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by its subsidiary. We have not guaranteed any of the obligations of HBB. Our principal sources of cash to fund liquidity needs are: (1) cash generated from operations and (2) borrowings available under the HBB Facility.
We have not guaranteed any of the obligations of HBB. Our principal sources of cash to fund liquidity needs are: (1) cash generated from operations and (2) borrowings available under the HBB Facility.
Of these totals, the third-party financial institution has made payments to participating suppliers to settle $48.9 million and $23.3 million, respectively, of our outstanding payment obligations.
As of December 31, 2024 and 2023, the Company has $56.9 million and $55.0 million, respectively, in outstanding payment obligations that are presented in Accounts payable on the Consolidated Balance Sheets. Of these totals, the third-party financial institution has made payments to participating suppliers to settle $48.2 million and $48.9 million, respectively, of our outstanding payment obligations.
Recently Issued and Adopted Accounting Standards Refer to Note 1 to the consolidated financial statements for discussion of recently issued and adopted accounting standards. 22 Table of Contents Item 7.
Off Balance Sheet Arrangements We have not entered into any off balance sheet financing arrangements. Recently Issued and Adopted Accounting Standards Refer to Note 1 to the consolidated financial statements for discussion of recently issued and adopted accounting standards.
We expect to continue to borrow against the facility and make voluntary repayments within the next twelve months. Repayment of the HBB Facility is due on June 30, 2025 , therefore all borrowings are classified as long term debt as of December 31, 2023. The obligations under the HBB Facility are secured by substantially all of HBB’s assets.
As a result of the Agreement, repayment of the HBB Facility is due on December 13, 2029, therefore all borrowings are classified as long term debt as of December 31, 2024. The obligations under the HBB Facility are secured by substantially all of HBB’s U.S. assets.
The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables, inventory and trademarks of the borrowers, as defined in the HBB Facility.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The maximum availability under the HBB Facility is governed by a borrowing base derived from advance rates against eligible trade receivables and inventory of HBB.
We do not rely on the supplier finance program as a means to manage our cash flow, as our payment terms to the third-party financial institution are the same as our terms to our participating suppliers. Therefore, we do not face a material risk if any party terminates the agreement.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) We do not rely on the supplier finance program as a means to manage our cash flow, as our payment terms to the third-party financial institution are the same as our terms to our participating suppliers.
As of December 31, 2023, we were in compliance with all financial covenants in the HBB Facility. We maintain an arrangement with a financial institution to sell certain U.S. trade receivables on a non-recourse basis. 21 Table of Contents Item 7.
A material decrease in interest rates could cause HBB to re-evaluate. We maintain an arrangement with a financial institution to sell certain U.S. trade receivables on a non-recourse basis.
The effective tax rate was lower for the twelve months ended December 31, 2023 due to the favorable impact of foreign operations in the current year. LIQUIDITY AND CAPITAL RESOURCES Our cash flows are provided by dividends paid or distributions made by HBB. The only material assets held by us are the investment in our consolidated subsidiary.
LIQUIDITY AND CAPITAL RESOURCES Our cash flows are provided by dividends paid or distributions made by HBB. The only material assets held by us are the investment in our consolidated subsidiary. As a result, certain statutory limitations or regulatory or financing agreements could affect the levels of distributions allowed to be made by our subsidiary.
The weighted average interest rate applicable to the HBB Facility for the year ended December 31, 2023 was 4.25%, includi ng the floating rate margin and the effect of the interest rate swap agreements described below.
As of December 31, 2024, the HBB Facility requires a fee of 0.20% per annum on the unused commitment there under. The weighted average interest rate applicable to the HBB Facility and the Prior HBB Facility for the year ended December 31, 2024 was 2.50% (after giving effect to the interest rate swap agreements described below).
Interest expense - Interest expense, net decreased $1.6 million due to decreased average borrowings outstanding under the HBB Facility, partially offset by higher interest rates. 19 Table of Contents Item 7.
Interest expense - Interest expense, net decreased $2.4 million due to decreased average borrowings outstanding under the HBB Facility, and lower interest rates compared to 2023.
As of December 31, 2023, the borrowing base under the HBB Facility w as $148.1 million a nd borrowings outstanding were $50.0 million. As of December 31, 2023, the excess availability under the HBB Facility was $98.1 million.
The HBB Facility also requires HBB to achieve a minimum fixed charge coverage ratio in certain circumstances, as defined in the HBB Facility. As of December 31, 2024, the borrowing base under the HBB Facility w as $107.3 million a nd borrowings outstanding were $50.0 million.
The following table presents selected cash flow information: Year Ended December 31 (In thousands) 2023 2022 Net cash provided by (used for) operating activities $ 88,636 $ (3,418) Net cash provided by (used for) investing activities $ (5,174) $ (2,279) Net cash provided by (used for) financing activities $ (70,072) $ 5,575 20 Table of Contents Item 7.
The following table presents selected cash flow information: Year Ended December 31 (In thousands) 2024 2023 Net cash provided by (used for) operating activities $ 65,415 $ 88,636 Net cash provided by (used for) investing activities $ (13,884) $ (5,174) Net cash provided by (used for) financing activities $ (20,948) $ (70,072) December 31, 2024 Compared with December 31, 2023 Operating activities - Net cash provided by operating activities was $65.4 million, representing more normalized post-pandemic working capital, compared to $88.6 million in the prior year, which benefited from significant excess inventory reduction activities.
Financing activities - Net cash used for financing activities was $70.1 million in 2023 compared to cash provided by financing activities of $5.6 million in 2022. The change is due to our focus on net working capital improvement and a significant reduction in borrowings outstanding on the HBB Facility. Capital Resources The HBB Facility expires in June 2025 .
Financing activities - Net cash used for financing activities was $20.9 million in 2024 compared to cash used for financing activities of $70.1 million in 2023. The change is due to a decrease in HBB’s net borrowing activity on the HBB Facility. This decrease was partially offset by increased purchases of treasury stock.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Contractual Obligations, Contingent Liabilities and Commitments Following is a table which summarizes the contractual obligations of Hamilton Beach Holding as of December 31, 2023: Payments Due by Period Contractual Obligations Total 2024 2025 2026 2027 2028 Thereafter Revolving credit agreements $ 50,000 $ — $ 50,000 $ — $ — $ — $ — Variable interest payments on HBB Facility 3,537 2,474 1,063 — — — — Purchase and other obligations 214,549 214,364 62 54 69 — — Operating lease obligations 59,769 8,306 6,517 5,970 5,677 5,519 27,780 Finance lease obligations 414 92 92 92 91 47 — Total contractual cash obligations $ 328,269 $ 225,236 $ 57,734 $ 6,116 $ 5,837 $ 5,566 $ 27,780 Our variable interest payments are calculated based upon our anticipated payment schedule and the December 31, 2023 base rate and applicable margins, as defined in the HBB Facility.
Contractual Obligations, Contingent Liabilities and Commitments Following is a table which summarizes the contractual obligations of Hamilton Beach Holding as of December 31, 2024: Payments Due by Period Contractual Obligations Total 2025 2026 2027 2028 2029 Thereafter Revolving credit agreements $ 50,000 $ — $ — $ — $ — $ 50,000 $ — Variable interest payments on HBB Facility 9,539 1,641 1,640 1,656 2,157 2,445 — Purchase and other obligations 240,503 240,318 53 68 64 — — Operating lease obligations 54,087 7,263 6,567 6,103 5,787 5,691 22,676 Finance lease obligations 385 107 107 106 64 1 — Total contractual cash obligations $ 354,514 $ 249,329 $ 8,367 $ 7,933 $ 8,072 $ 58,137 $ 22,676 Our variable interest payments are calculated based upon our contractual payment schedule and the December 31, 2024 Base Rate (as defined in the HBB Facility) plus an applicable margin of 0.00%.
Dividend amounts are discretionary to the extent that for the thirty days prior to the dividend payment date, and after giving effect to the dividend payment, HBB maintains excess availability of at least $30.0 million. The HBB Facility also requires HBB to achieve a minimum fixed charge coverage ratio in certain circumstances, as defined in the HBB Facility.
Additionally, if Excess Availability (as defined in the HBB Facility) is less than $15.0 million at any time, the HBB Facility will require that HBB maintain a minimum Fixed Charge Coverage Ratio (as defined in the HBB Facility) of 1.00 to 1.00 until Excess Availability is greater than or equal to $15.0 million for 30 consecutive days.
Additionally, during 2022, we recorded a $0.3 million pension settlement charge which did not recur. Income tax expense - The effective tax rate on income was 20.4% and 22.1% for the twelve months ended December 31, 2023 and 2022, respectively.
In 2024, other expense (income), net includes currency losses of $0.9 million in the current year compared to currency gains of $0.3 million in 2023. Income tax expense - The effective tax rate on income was 7.8% and 20.4% for the years ended December 31, 2024 and 2023, respectively.
Borrowings bear interest at a floating rate, which can be a base rate, Secured Overnight Financing Rate (SOFR) or bankers’ acceptance rate, as defined in the HBB Facility, plus an applicable margin. T he applicable margins, effective December 31, 2023, for base rate loans and SOFR loans denominated in U.S. dollars were 0.00% and 1.55%, respectively.
As of December 31, 2024, interest on outstanding loans under the HBB Facility accrues at a per annum rate equal to, at HBB’s option, either Term Secured Overnight Financing Rate (SOFR) (as defined in the HBB Facility) plus 1.65% or the Base Rate (as defined in the HBB) plus 0.00%.
Given the funded status of the two defined benefit pension plans, we do not expect to contribute to the pension plans in 2024. Pension benefit payments are made from assets of the pension plans. Off Balance Sheet Arrangements We have not entered into any off balance sheet financing arrangements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Given the funded status of the one defined benefit pension plan, we do not expect to contribute to the pension plan in 2025. Pension benefit payments are made from assets of the pension plan.
Removed
Revenue decreased in the U.S., Canadian, and Latin American Consumer markets. Partially offsetting these revenue decreases was an increase in the Mexican Consumer market.
Added
These increases were partially offset by lower average selling prices reflecting lower costs during the year and unfavorable foreign currency fluctuations. Additionally, the acquisition of HealthBeacon added a new revenue stream during the year and contributed $4.3 million in revenue for 2024.
Removed
The Global Commercial market had decreased revenue compared to 2022, when revenue grew 50% due to a continued strong rebound in the food service and hospitality industries from pandemic-driven demand softness, as well as the Company's new products, line extensions and sales initiatives.
Added
The increase is primarily due to the addition of $7.7 million of HealthBeacon expenses, a $5.9 million increase in employee-related costs, including $4.0 million of increased incentive compensation due to higher achievement percentage, an increase in outside services and non-recurring items, which include an incremental $1.0 million of HealthBeacon transaction costs and the absence of a $0.9 million insurance recovery that occurred in the prior year.
Removed
Selling, general and administrative expenses - Selling, general and administrative expenses increased $18.3 million due primarily to the $10.0 million insurance recovery recognized during the first quarter of 2022 which did not recur. Additionally, there was an increase in employee-related costs in the current year that was partially offset by a decrease in outside services.
Added
Pension termination expense - During 2024, a one-time non-cash expense of $7.6 million was incurred in connection with the termination of the Company’s U.S. defined benefit pension plan related to the reclassification of historical unrecognized losses from Accumulated Other Comprehensive Income. Other expense (income), net - Other expense (income), net increased $1.2 million.
Removed
In 2023, other expense (income), net includes currency gains of $0.3 million in the current year compared to currency losses of $1.9 million in 2022. This decrease is driven by the liquidation of the Brazilian subsidiary, which resulted in $2.1 million of accumulated other comprehensive losses being released into other expense (income), net during the first quarter of 2022.
Added
The effective tax rate was lower for the year ended December 31, 2024 due to a tax benefit for foreign operations and a tax benefit related to a tax accounting method change in the U.S. which are not expected to recur. These were partially offset by non-deductible executive compensation and a valuation allowance on HealthBeacon losses.
Removed
The payment of these obligations by the Company is included in cash used in operating activities in the Consolidated Statement of Cash Flows. As of December 31, 2023 and 2022, the Company has $55.0 million and $23.3 million, respectively, in outstanding payment obligations that are presented in Accounts payable on the Consolidated Balance Sheets.
Added
See Note 1 “Nature of Operations and Summary of Significant Accounting Policies ” included in our Financial Statements and Supplementary Data contained in Part IV of this Form 10-K for a rollforward of the Company’s outstanding payment obligations confirmed as valid under our supplier finance program. 20 Table of Contents Item 7.
Removed
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HAMILTON BEACH BRANDS HOLDING COMPANY (Tabular Amounts in Thousands, Except Per Share and Percentage Data) December 31, 2023 Compared with December 31, 2022 Operating activities - Net cash provided by operating activities was $88.6 million compared to cash used for operating activities of $3.4 million in 2022 primarily due to our focus on net working capital improvement.
Added
Net working capital provided cash of $14.5 million in 2024 compared to cash provided of $49.5 million in 2023. The 2024 period benefited from the Company's continued focus on working capital management which led to improvements in days sales outstanding.
Removed
Net working capital provided cash of $49.5 million in 2023 compared to a use of cash of $39.0 million in 2022. Net cash provided by accounts payable was $37.5 million in 2023 compared to $69.9 million used in 2022. Net cash provided by inventory was $30.8 million in 2023 compared to $26.4 million provided in 2022.
Added
The net cash provided by operating activities during 2024 reflects the net working capital changes and increased net income which includes non-cash pension termination and stock compensation expenses, offset by a deferred income tax benefit.
Removed
Trade receivables used net cash of $18.8 million during 2023 compared to $4.5 million provided in the prior year due to timing of collections. Investing activities - Net cash used for investing activities increased in 2023 compared to 2022 related to $1.6 million in secure loan payments made to HealthBeacon and internal-use software development costs.
Added
Investing activities - Net cash used for investing activities increased in 2024 compared to 2023 related primarily to the acquisition of HealthBeacon offset by the extinguishment of our secured loan to HealthBeacon in 2024 which provided net cash of $1.6 million. Additionally, the Company used excess cash on hand to invest in a six-month U.S. Treasury bill during 2024.
Removed
The applicable margins, effective December 31, 2023, for base rate loans and bankers’ acceptance loans denominated in Canadian dollars were 0.00% and 1.55%, respectively. The HBB Facility also requires a fee of 0.25% per annum on the unused commitment. The margins and unused com mitment fee under the HBB Facility are subject to quarterly adjustment based on average excess availability.
Added
Capital Resources On December 13, 2024, HBB entered into the Second Amended and Restated Credit Agreement (the “Agreement”).
Removed
The HBB Facility includes restrictive covenants, which, among other things, limit the payment of dividends, subject to achieving availability thresholds.
Added
The Agreement restated HBB’s prior credit agreement (the “Prior HBB Facility”) in its entirety and extended the term of HBB's seni or secured floating-rate revolving credit facility (the “HBB Facility”) to December 13, 2029, decreased the credit facility from $150 million to $125 million, added an optional $25.0 million term loan, and removed the Canadian subsidiary from the credit facility.
Removed
Dividends are not to exceed $7.0 million during any calendar year to the extent that for the thirty days prior to the dividend payment date, and after giving effect to the dividend payment, HBB maintains excess availability of at least $18.0 million.
Added
As of December 31, 2024, the excess availability under the HBB Facility was $57.3 million. 21 Table of Contents Item 7.
Added
The HBB Facility contains customary representations and warranties, events of default and covenants, including, among other things, covenants applicable to HBB and its subsidiaries limiting indebtedness, liens, investments, dispositions and restricted payments.
Added
As of December 31, 2024, we were in compliance with all applicable financial covenants in the HBB Facility. HBB does not expect to make voluntary repayments within the next twelve months under the HBB Facility as the rate of return to invest excess cash exceeds the average interest rate of the HBB Facility.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−0 removed4 unchanged
Biggest changeFOREIGN CURRENCY EXCHANGE RATE RISK We operate internationally through our foreign operating subsidiaries and enter into transactions denominated in foreign currencies, principally the Canadian dollar, the Mexican peso and, to a lesser extent, the Chinese yuan and Brazilian real. As such, our financial results are subject to the variability that arises from exchange rate movements.
Biggest changeFOREIGN CURRENCY EXCHANGE RATE RISK We operate internationally through our foreign operating subsidiaries and enter into transactions denominated in foreign currencies, principally the Canadian dollar, the Mexican peso and, to a lesser extent, the Chinese yuan and the European Union euro. As such, our financial results are subject to the variability that arises from exchange rate movements.
The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of revenue, expenses, assets and liabilities. The potential impact of currency fluctuation increases as international expansion increases. We use forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies and not for trading purposes.
The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of revenues, expenses, assets and liabilities. The potential impact of currency fluctuation increases as international expansion increases. We use forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies and not for trading purposes.
The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements. To reduce the exposure to changes in the market rate of interest, we have entered into interest rate swap agreements for a portion of its floating rate financing arrangements.
The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and business financing requirements. To reduce the exposure to changes in the market rate of interest, we have entered into interest rate swap agreements for a portion of our floating rate financing arrangements.
For the purpose of risk analysis, we use sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in foreign currency exchange rates. We assume that a loss in fair value is either a decrease to its assets or an increase to its liabilities.
For the purpose of risk analysis, we use sensitivity analysis to measure the potential loss in fair value of financial instruments sensitive to changes in foreign currency exchange spot rates. We assume that a loss in fair value is either a decrease to our assets or an increase to our liabilities.
Additionally, a hypothetical 10% relative increase in interest rates would cause an increase of $0.2 million in the fair value of interest rate swap agreements and the resulting fair value would be a receivable of $4.2 million. Neither would have a material impact to our interest expense, net of $3.0 million as of December 31, 2023.
Additionally, a hypothetical 10% relative increase in interest rates would cause an increase of $0.2 million in the fair value of interest rate swap agreements and the resulting fair value would be a receivable of $4.2 million. Neither would have a material impact to our interest expense, net of $0.6 million as of December 31, 2024.
Assuming a hypothetical 10% weakening of the U.S. dollar as of December 31, 2023, the fair value of foreign currency-sensitive financial instruments, which represents forward foreign currency exchange contracts, would be decreased by $2.5 million compared with its fair value as of December 31, 2023.
Assuming a hypothetical 10% weakening of the U.S. dollar as of December 31, 2024, the fair value of foreign currency-sensitive financial instruments, which represents forward foreign currency exchange contracts, would be decreased by $1.2 million compared with its fair value as of December 31, 2024.
We assume that a loss in fair value is an increase to its liabilities. The fair value of our interest rate swap agreements was a receivable of $4.0 million as of December 31, 2023.
We assume that a loss in fair value is an increase in our receivables. The fair value of our interest rate swap agreements was a receivable of $4.0 million as of December 31, 2024.
The fair value of our foreign currency exchange contracts was a net payable of $0.5 million as of December 31, 2023.
The fair value of our foreign currency exchange contracts was a net receivable of $0.8 million as of December 31, 2024.

Other HBB 10-K year-over-year comparisons