HAMILTON BEACH BRANDS HOLDING CO, 10-Q filed on 5/5/2021
Quarterly Report
v3.21.1
Cover Page - shares
 3 Months Ended
Mar. 31, 2021
Apr. 30, 2020
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2021  
Document Transition Report false  
Entity File Number 001-38214  
Entity Registrant Name HAMILTON BEACH BRANDS HOLDING COMPANY  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 31-1236686  
Entity Address, Address Line One 4421 WATERFRONT DR.  
Entity Address, City or Town GLEN ALLEN  
Entity Address, State or Province VA  
Entity Address, Postal Zip Code 23060  
City Area Code (804)  
Local Phone Number 273-9777  
Title of 12(b) Security Class A Common Stock, Par Value $0.01 Per Share  
Trading Symbol HBB  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period false  
Entity Shell Company false  
Entity Central Index Key 0001709164  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Shares Outstanding Class A    
Entity Information [Line Items]    
Shares Outstanding (in shares)   9,845,038
Class B Common stock    
Entity Information [Line Items]    
Shares Outstanding (in shares)   4,029,355
v3.21.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Current assets      
Cash and cash equivalents $ 1,375 $ 2,415 $ 2,078
Trade receivables, net 107,934 144,797 69,569
Inventory 163,831 173,962 89,986
Prepaid expenses and other current assets 13,770 15,118 16,427
Current assets of discontinued operations 0 0 324
Total current assets 286,910 336,292 178,384
Property, plant and equipment, net 24,252 23,490 22,465
Goodwill 6,253 6,253 6,253
Other intangible assets, net 1,842 1,892 2,818
Deferred income taxes 3,416 6,965 5,128
Deferred costs 13,960 13,449 11,172
Other non-current assets 2,708 2,827 2,150
Total assets 339,341 391,168 228,370
Current liabilities      
Accounts payable 102,725 152,054 61,578
Accounts payable to NACCO Industries, Inc. 10 505 496
Revolving credit agreements 0 0 34,547
Accrued compensation 10,894 15,981 8,126
Accrued product returns 5,860 6,853 7,536
Other current liabilities 18,465 23,677 14,098
Current liabilities of discontinued operations 0 0 1,099
Total current liabilities 137,954 199,070 127,480
Revolving credit agreements 102,555 98,360 35,000
Other long-term liabilities 16,133 13,633 12,494
Total liabilities 256,642 311,063 174,974
Stockholders' equity      
Capital in excess of par value 59,456 58,485 55,062
Treasury stock (5,960) (5,960) (5,960)
Retained earnings 46,489 44,915 23,996
Accumulated other comprehensive loss (17,429) (17,476) (19,842)
Total stockholders' equity 82,699 80,105 53,396
Total liabilities and stockholders' equity 339,341 391,168 228,370
Class A Common stock      
Stockholders' equity      
Common stock 102 100 99
Class B Common stock      
Stockholders' equity      
Common stock $ 41 $ 41 $ 41
v3.21.1
Consolidated Statements of Operations - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Statement [Abstract]    
Revenue $ 149,249 $ 120,846
Cost of sales 117,556 95,806
Gross profit 31,693 25,040
Selling, general and administrative expenses 26,379 24,213
Amortization of intangible assets 50 324
Operating profit 5,264 503
Interest expense, net 720 603
Other expense, net 171 1,702
Income (loss) from continuing operations before income taxes 4,373 (1,802)
Income tax expense (benefit) 1,497 (448)
Net income (loss) from continuing operations 2,876 (1,354)
Income from discontinued operations, net of tax 0 22,866
Net income $ 2,876 $ 21,512
Basic and diluted earnings (loss) per share:    
Continuing operations, basic (in dollars per share) $ 0.21 $ (0.10)
Continuing operations, diluted (in dollars per share) 0.21 (0.10)
Discontinued operations, basic (in dollars per share) 0 1.68
Discontinued operations, diluted (in dollars per share) 0 1.68
Basic earnings (loss) per share (in dollars per share) 0.21 1.58
Diluted earnings (loss) per share (in dollars per share) $ 0.21 $ 1.58
Basic weighted average shares outstanding (in shares) 13,855,000 13,625,000
Diluted weighted average shares outstanding (in shares) 13,874,000 13,625,000
v3.21.1
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Net income $ 2,876 $ 21,512
Other comprehensive income (loss), net of tax:    
Foreign currency translation adjustment 678 1,057
(Loss) gain on long-term intra-entity foreign currency transactions (1,033) (4,910)
Cash flow hedging activity 164 (162)
Reclassification of hedging activities into earnings 125 110
Reclassification of pension adjustments into earnings 113 195
Total other comprehensive income (loss), net of tax 47 (3,710)
Comprehensive income $ 2,923 $ 17,802
v3.21.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Operating activities    
Net income (loss) from continuing operations $ 2,876 $ (1,354)
Adjustments to reconcile net income (loss) from continuing operations to net cash used for operating activities:    
Depreciation and amortization 896 792
Deferred income taxes 3,702 1,182
Stock compensation expense 1,107 555
Other 405 343
Net changes in operating assets and liabilities:    
Affiliate payable (495) 0
Trade receivables 36,853 34,811
Inventory 9,774 17,047
Other assets 926 (5,637)
Accounts payable (49,152) (49,550)
Other liabilities (8,781) (8,231)
Net cash provided by (used for) operating activities from continuing operations (1,889) (10,042)
Investing activities    
Expenditures for property, plant and equipment (1,746) (625)
Net cash provided by (used for) investing activities from continuing operations (1,746) (625)
Financing activities    
Net additions to revolving credit agreements 4,129 11,102
Cash dividends paid (1,302) (1,226)
Other financing (134) 0
Net cash provided by (used for) financing activities from continuing operations 2,693 9,876
Cash flows from discontinued operations    
Net cash provided by (used for) operating activities from discontinued operations 0 (4,968)
Net cash provided by (used for) investing activities from discontinued operations 0 6
Net cash provided by (used for) financing activities from discontinued operations 0 0
Cash provided by (used for) discontinued operations 0 (4,962)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (85) 1,376
Cash, cash equivalents and restricted cash    
Increase (decrease) for the period from continuing operations (1,027) 585
Decrease for the period from discontinued operations 0 (4,962)
Balance at the beginning of the period 3,436 7,164
Balance at the end of the period 2,409 2,787
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations [Abstract]    
Total cash, cash equivalents, and restricted cash $ 2,409 $ 2,787
v3.21.1
Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Capital in Excess of Par Value
Treasury Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Class A Common stock
Common Stock
Class B Common stock
Common Stock
Balance, beginning of period at Dec. 31, 2019 $ 36,266 $ 54,509 $ (5,960) $ 3,710 $ (16,132) $ 98 $ 41
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 21,512     21,512      
Issuance of common stock, net of conversions 0 (1)       1  
Share-based compensation expense 554 554          
Cash dividends (1,226)     (1,226)      
Other comprehensive income (loss) (4,015)       (4,015)    
Reclassification adjustment to net income (loss) 305       305    
Balance, end of period at Mar. 31, 2020 53,396 55,062 (5,960) 23,996 (19,842) 99 41
Balance, beginning of period at Dec. 31, 2020 80,105 58,485 (5,960) 44,915 (17,476) 100 41
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net income 2,876     2,876      
Issuance of common stock, net of conversions 0 (2)       2  
Share-based compensation expense 973 973          
Cash dividends (1,302)     (1,302)      
Other comprehensive income (loss) (191)       (191)    
Reclassification adjustment to net income (loss) 238       238    
Balance, end of period at Mar. 31, 2021 $ 82,699 $ 59,456 $ (5,960) $ 46,489 $ (17,429) $ 102 $ 41
v3.21.1
Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]    
Cash dividends (in dollars per share) $ 0.095 $ 0.09
v3.21.1
Basis of Presentation and Recently Issued Accounting Standards
 3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Recently Issued Accounting Standards Basis of Presentation and Recently Issued Accounting Standards
Basis of Presentation

Hamilton Beach Brands Holding Company is a holding company and operates through its wholly-owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”) (collectively “Hamilton Beach Holding” or the “Company”). HBB is 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. HBB operates in the consumer, commercial and specialty small appliance markets.

The Company previously operated through its other wholly-owned subsidiary, The Kitchen Collection, LLC ("KC"), which is reported as discontinued operations in all periods presented herein. KC completed its dissolution on April 3, 2020 with a pro-rata distribution of its remaining assets to creditors, at which time the KC legal entity ceased to exist. See Note 2 for further information on discontinued operations.

The financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the remainder of the year due to the highly seasonal nature of our primary markets. A majority of revenue and operating profit typically occurs in the second half of the calendar year when sales of our products to retailers and consumers historically increase significantly for the fall holiday-selling season.

Accounting Standards Not Yet Adopted

The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or nonpublic entities, the Company can adopt the new or revised standard at the time nonpublic entities adopt the new or revised standard.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. For nonpublic entities, the amendments are currently effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 when required and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)," which requires an entity to recognize credit losses as an allowance rather than as a write-down. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is planning to adopt ASU 2016-03 for its year ending December 31, 2022 and is currently evaluating to what extent ASU 2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules will be effective for the Company for its year ending December 31, 2022. The Company is currently in the process of evaluating the impact of adoption of the new accounting rules on the Company’s financial condition, results of operations, cash flows and disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.


Assets Held for Sale

During the fourth quarter of 2020, the Company committed to a plan to sell our Brazilian subsidiary and determined that we met all of the criteria to classify the assets and liabilities of this business as held for sale. The carrying amounts of the major classes of assets that are classified as held for sale as of March 31, 2021 are as follows: $1.6 million of trade receivables, net, and $0.5 million of inventory. As of March 31, 2021, the total of these amounts are included in the prepaid expenses and other current assets line item on the Consolidated Balance Sheet. The carrying value of the disposal group approximates the fair value, which we determined based on the expected sales price.

In April 2021, the Company made the decision to wind down the Brazilian subsidiary and enter into a licensing agreement with a third party to service the Brazilian market. As a result, we are no longer committed to selling the subsidiary. The carrying amounts of the assets will be reclassified to held and used during the second quarter of 2021. The disposal group had $2.5 million of accumulated other comprehensive losses at March 31, 2021, which will be recognized in net income upon substantial liquidation of the Brazilian subsidiary which we expect to occur in the back half of 2021.
v3.21.1
Discontinued Operations
 3 Months Ended
Mar. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
On October 10, 2019, the Board approved the wind down of KC's retail operations. Accordingly, KC is reported as discontinued operations in all periods presented. KC completed its dissolution on April 3, 2020 with a pro-rata distribution of its remaining assets to creditors, at which time the KC legal entity ceased to exist and was no longer consolidated by the Company. Neither Hamilton Beach Brands Holding Company nor Hamilton Beach Brands, Inc. received a distribution.

KC’s operating results are reflected as discontinued operations for all periods presented. The major line items constituting the income (loss) from discontinued operations, net of tax are as follows:
THREE MONTHS ENDED
MARCH 31
2020
Revenue$631 
Cost of sales— 
Gross profit631 
Selling, general and administrative expenses
1,047 
Adjustment of lease termination liability(1)
(16,457)
Adjustment of other current liabilities(2)
(6,608)
Operating income22,649 
Income from discontinued operations before income taxes22,649 
Income tax benefit(217)
Income from discontinued operations, net of tax$22,866 

(1)    Represents an adjustment to the lease termination obligation based on the final distribution of KC's remaining assets on April 3, 2020.

(2)    Represents an adjustment to the carrying value of substantially all of the other current liabilities based on the final distribution of KC's remaining assets on April 3, 2020.
Due to the deconsolidation of KC on April 3, 2020, there are no assets or liabilities associated with KC as of March 31, 2021 and December 31, 2020. The major classes of KC's assets and liabilities included as part of discontinued operations as of March 31, 2020 are as follows:
MARCH 31
2020
Assets
Cash and cash equivalents$145 
Prepaid expenses and other current assets179 
Current assets of discontinued operations$324 
Liabilities
Accounts payable$63 
Lease termination liability791 
Other current liabilities245 
Current liabilities of discontinued operations$1,099 

Neither Hamilton Beach Brands Holding Company nor HBB has guaranteed any obligations of KC.
v3.21.1
Transfer of Financial Assets
 3 Months Ended
Mar. 31, 2021
Transfers and Servicing [Abstract]  
Transfer of Financial Assets Transfer of Financial Assets The Company has entered into an arrangement with a financial institution to sell certain US trade receivables on a non-recourse basis. The Company utilizes this arrangement as an integral part of financing working capital.  Under the terms of the agreement, the Company receives cash proceeds and retains no rights or interest and has no obligations with respect to the sold receivables.  These transactions are accounted for as sold receivables which result in a reduction in trade receivables because the agreement transfers effective control over and risk related to the receivables to the buyer. Under this arrangement, the Company derecognized $29.8 million and $36.5 million of trade receivables during the three months ending March 31, 2021 and 2020, respectively, and $162.4 million during the year ending December 31, 2020. The loss incurred on sold receivables in the consolidated results of operations for the three months ended March 31, 2021 and 2020 was not material. The Company does not carry any servicing assets or liabilities. Cash proceeds from this arrangement are reflected as operating activities in the Consolidated Statements of Cash Flows.
v3.21.1
Fair Value Disclosure
 3 Months Ended
Mar. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value Disclosure Fair Value Disclosure
The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:
DescriptionBalance Sheet LocationMARCH 31
2021		 DECEMBER 31
2020		MARCH 31
2020
Assets:
Interest rate swap agreements
CurrentPrepaid expenses and other current assets$— $— $— 
Foreign currency exchange contracts
CurrentPrepaid expenses and other current assets— — 767 
$— $— $767 
Liabilities:
Interest rate swap agreements
CurrentOther current liabilities$333 $380 $362 
Long-termOther long-term liabilities591 779 818 
Foreign currency exchange contracts
CurrentOther current liabilities249 518 — 
$1,173 $1,677 $1,180 

The Company measures its derivatives at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. The Company uses a present value technique that incorporates the LIBOR swap curve, foreign currency spot rates and foreign currency forward rates to value its derivatives, including its interest rate swap agreements and foreign currency exchange contracts, and also incorporates the effect of its subsidiary and counterparty credit risk into the valuation.

Other Fair Value Measurement Disclosures

The carrying amounts of cash and cash equivalents, trade receivables and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair value of the revolving credit agreement, including book overdrafts, which approximate book value, was determined using current rates offered for similar obligations taking into account subsidiary credit risk, which is Level 2 as defined in the fair value hierarchy.
There were no transfers into or out of Levels 1, 2 or 3 during the three months ended March 31, 2021.
v3.21.1
Stockholders' Equity
 3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
Stockholders' Equity Stockholders' Equity
Capital Stock 

The following table sets forth the Company's authorized capital stock information:
MARCH 31
2021		DECEMBER 31
2020		MARCH 31
2020
Preferred stock, par value $0.01 per share
Preferred stock authorized5,000 5,000 5,000 
Preferred stock outstanding— — — 
Class A Common stock, par value $0.01 per share
Class A Common stock authorized70,000 70,000 70,000 
Class A Common issued(1)(2)
10,186 10,006 9,917 
Treasury Stock365 365 365 
Class B Common stock, par value $0.01 per share, convertible into Class A on a one-for-one basis
Class B Common stock authorized30,000 30,000 30,000 
Class B Common issued(1)
4,037 4,045 4,074 
(1) Class B Common converted to Class A Common were 8 and 3 shares during the three months ending March 31, 2021 and 2020, respectively.

(2) The Company issued Class A Common shares of 172 and 108 during the three months ending March 31, 2021 and 2020, respectively.

Accumulated Other Comprehensive Loss: The following table summarizes changes in accumulated other comprehensive loss by component and related tax effects for periods shown:
 Foreign CurrencyDeferred Gain (Loss) on Cash Flow Hedging Pension Plan AdjustmentTotal
Balance, January 1, 2021$(9,775)$(1,344)$(6,357)$(17,476)
Other comprehensive income (loss)(276)222 — (54)
Reclassification adjustment to net income (loss)— 182 156 338 
Tax effects(79)(115)(43)(237)
Balance, March 31, 2021$(10,130)$(1,055)$(6,244)$(17,429)
Balance, January 1, 2020$(8,221)$(341)$(7,570)$(16,132)
Other comprehensive income (loss)(4,985)(171)— (5,156)
Reclassification adjustment to net income (loss)— 154 239 393 
Tax effects1,132 (35)(44)1,053 
Balance, March 31, 2020$(12,074)$(393)$(7,375)$(19,842)
v3.21.1
Revenue
 3 Months Ended
Mar. 31, 2021
Revenue Recognition and Deferred Revenue [Abstract]  
Revenue Revenue
Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, which includes an estimate for variable consideration.

HBB’s 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. There is no guarantee to the customer as HBB may repair or replace, at its option, those products returned under warranty.  Accordingly, the Company determined that no separate performance obligation exists.

HBB products are not sold with a general right of return. However, based on historical experience, a portion of products sold are estimated to be returned due to reasons such as product failure and excess inventory stocked by the customer, which, subject to certain terms and conditions, HBB will agree to accept. Product returns, customer programs and incentive offerings, including special pricing agreements, price competition, promotions, and other volume-based incentives are accounted for as variable consideration.

A description of revenue sources and performance obligations for HBB are as follows:

Consumer and Commercial product revenue
Transactions with both consumer and commercial customers generally originate upon the receipt of a purchase order from the customer, which in some cases are governed by master sales agreements, specifying product(s) that the customer desires. Contracts for product revenue have an original duration of one year or less, and payment terms are generally standard and based on customer creditworthiness. Revenue from product sales is recognized at the point in time when control transfers to the customer, which is either when product is shipped from the Company's facility, or delivered to customers, depending on the shipping terms. The amount of revenue recognized varies primarily with changes in returns. In addition, the Company offers price concessions to our customers for incentive offerings, special pricing agreements, price competition, promotions or other volume-based arrangements. We evaluated such agreements with our customers and determined returns and price concessions should be accounted for as variable consideration.

Consumer product revenue consists 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. A majority of this revenue is in North America.

Commercial product revenue consists of sales of products for restaurants, fast-food chains, bars and hotels. Approximately one-half of our commercial sales are in the U.S. and the other half is in markets across the globe.

License revenue
From time to time, the Company enters into exclusive and non-exclusive licensing agreements which grant the right to use certain of HBB’s intellectual property ("IP") in connection with designing, manufacturing, distributing, advertising, promoting and selling the licensees’ products during the term of the agreement. The IP that is licensed generally consists of trademarks, trade names, patents, trade dress, and/or logos (the “Licensed IP”). In exchange for granting the right to use the Licensed IP, HBB receives a royalty payment, which is a function of (1) the total net sales of products that use the Licensed IP and (2) the royalty percentage that is stated in the licensing agreement. HBB recognizes revenue at the later of when the subsequent sales occur or satisfying the performance obligation (over time).

The following table sets forth Company's revenue on a disaggregated basis for the three months ended March 31:
THREE MONTHS ENDED
MARCH 31
 2021 2020
Type of good or service:
  Consumer products$139,513 $109,717 
  Commercial products8,593 9,918 
  Licensing1,143 1,211 
     Total revenues$149,249 $120,846 
v3.21.1
Contingencies
 3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Contingencies Contingencies
Various legal and regulatory proceedings and claims have been or may be asserted against Hamilton Beach Brands Holdings Company and certain subsidiaries relating to the conduct of its businesses, including product liability, patent infringement, asbestos related claims, environmental and other claims. These proceedings and claims are incidental to the ordinary course of business of the Company. Management believes that it has meritorious defenses and will vigorously defend the Company in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.

These matters are subject to inherent uncertainties and 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 for the period in which the ruling occurs, or in future periods.

HBB is a defendant in a legal proceeding in which the plaintiff alleges that certain HBB products infringe the plaintiff’s patents. On May 3, 2019, the jury returned its verdict finding that the Company had infringed certain patents of the plaintiff and, as a result, awarded the plaintiff damages in the amount of $3.2 million. On May 2, 2020, the Company’s motion for judgment as a matter of law for non-infringement of certain claims of one of the patents in the case was granted. Since May 2, 2020, the court has also issued orders denying plaintiff’s motion for attorney’s fees and reducing plaintiff’s award. In August 2020, the court entered an order awarding the plaintiff additional sales posttrial and interest on the damages award through July 31, 2020 and continuing interest in a de minimis amount until the judgment is satisfied. As of March 31, 2021, the accrual for the contingent loss is $3.1 million. HBB continues to vigorously pursue the appeal of the judgment and adverse lower court rulings with the US Court of Appeals for the Federal Circuit, as HBB maintains it does not infringe any valid patent claim and the damages award is not supported by the evidence.

Hamilton Beach Brands Holding Company (HBBHC) is a defendant in a legal proceeding instituted in February 2020 in which the plaintiff seeks to hold the Company liable for the unsatisfied portion of an agreed final judgment that plaintiff obtained against KC related to KC’s failure to continue to operate forty-nine stores during the term of the store leases. In February 2020, KC agreed to the entry of a final judgment in favor of the plaintiff in the amount of $8.1 million and in April 2020 the plaintiff received $0.3 million in the final distribution of KC assets to KC creditors. The Company believes that the plaintiff’s claims are without merit and will vigorously defend against plaintiff’s claims.

Environmental matters

HBB is investigating or remediating historical environmental contamination at some current and former sites operated by HBB or by businesses it acquired. Based on the current stage of the investigation or remediation at each known site, HBB estimates the total investigation and remediation costs and the period of assessment and remediation activity required for each site. The estimate of future investigation and remediation costs is primarily based on variables associated with site clean-up, including, but not limited to, physical characteristics of the site, the nature and extent of the contamination and applicable regulatory programs and remediation standards. No assessment can fully characterize all subsurface conditions at a site. There is no assurance that additional assessment and remediation efforts will not result in adjustments to estimated remediation costs or the time frame for remediation at these sites.

HBB's estimates of investigation and remediation costs may change if it discovers contamination at additional sites or additional contamination at known sites, if the effectiveness of its current remediation efforts change, if applicable federal or state regulations change or if HBB's estimate of the time required to remediate the sites changes. HBB's revised estimates may differ materially from original estimates.
At March 31, 2021, December 31, 2020, and March 31, 2020, HBB had accrued undiscounted obligations of $3.1 million, $3.1 million and $4.2 million respectively, for environmental investigation and remediation activities. HBB estimates that it is reasonably possible that it may incur additional expenses in the range of zero to $1.7 million related to the environmental investigation and remediation at these sites.
v3.21.1
Income Taxes
 3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe effective tax rate on income from continuing operations was 34.2% and 24.9% for the three months ended March 31, 2021 and 2020, respectively. The effective tax rate was higher for the three months ended March 31, 2021 due to the inclusion of $0.4 million related to interest and penalties on unrecognized tax benefits as a discrete expense item.
v3.21.1
Subsequent Events
 3 Months Ended
Mar. 31, 2021
Subsequent Events [Abstract]  
Subsequent Events Subsequent EventsOn April 9, 2021, the Company entered into Amendment No. 9 to the Amended and Restated Credit Agreement by and among Wells Fargo Bank, National Association, as Administrative Agent, the Lenders that are Parties thereto as the Lenders, Hamilton Beach Brands, Inc., as Parent and U.S. Borrower, and Hamilton Beach Brands Canada, Inc., as Canadian Borrower (the “Amendment”). Due to the highly seasonal nature of the Company’s primary markets, Amendment No. 8 dated November 23, 2020 provided for increases in advance rates used to determine the borrowing base during periods of the second half of the calendar year. Amendment No. 9 increases the credit facility from $125 million to $140 million for a period of sixty days from its effective date to provide similar flexibility as demand for small kitchen appliances is expected to remain strong in the first half of 2021. The Amendment did not result in any other changes to the terms or due date of the credit facility.
v3.21.1
Basis of Presentation and Recently Issued Accounting Standards (Policies)
 3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation

Hamilton Beach Brands Holding Company is a holding company and operates through its wholly-owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”) (collectively “Hamilton Beach Holding” or the “Company”). HBB is 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. HBB operates in the consumer, commercial and specialty small appliance markets.

The Company previously operated through its other wholly-owned subsidiary, The Kitchen Collection, LLC ("KC"), which is reported as discontinued operations in all periods presented herein. KC completed its dissolution on April 3, 2020 with a pro-rata distribution of its remaining assets to creditors, at which time the KC legal entity ceased to exist. See Note 2 for further information on discontinued operations.

The financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the remainder of the year due to the highly seasonal nature of our primary markets. A majority of revenue and operating profit typically occurs in the second half of the calendar year when sales of our products to retailers and consumers historically increase significantly for the fall holiday-selling season.
Accounting Standards Not Yet Adopted
Accounting Standards Not Yet Adopted

The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public or nonpublic entities, the Company can adopt the new or revised standard at the time nonpublic entities adopt the new or revised standard.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)," which requires an entity to recognize assets and liabilities for the rights and obligations created by leased assets. For nonpublic entities, the amendments are currently effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is planning to adopt ASU 2016-02 when required and is currently evaluating to what extent ASU 2016-02 will affect the Company's financial position, results of operations, cash flows and related disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326)," which requires an entity to recognize credit losses as an allowance rather than as a write-down. For nonpublic entities, the amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is planning to adopt ASU 2016-03 for its year ending December 31, 2022 and is currently evaluating to what extent ASU 2016-13 will affect the Company's financial position, results of operations, cash flows and related disclosures.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new accounting rules reduce complexity by removing specific exceptions to general principles related to intraperiod tax allocations, ownership changes in foreign investments, and interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new accounting rules also simplify accounting for franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new accounting rules will be effective for the Company for its year ending December 31, 2022. The Company is currently in the process of evaluating the impact of adoption of the new accounting rules on the Company’s financial condition, results of operations, cash flows and disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new accounting rules provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.
v3.21.1
Discontinued Operations (Tables)
 3 Months Ended
Mar. 31, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Discontinued Operations The major line items constituting the income (loss) from discontinued operations, net of tax are as follows:
THREE MONTHS ENDED
MARCH 31
2020
Revenue$631 
Cost of sales— 
Gross profit631 
Selling, general and administrative expenses
1,047 
Adjustment of lease termination liability(1)
(16,457)
Adjustment of other current liabilities(2)
(6,608)
Operating income22,649 
Income from discontinued operations before income taxes22,649 
Income tax benefit(217)
Income from discontinued operations, net of tax$22,866 

(1)    Represents an adjustment to the lease termination obligation based on the final distribution of KC's remaining assets on April 3, 2020.

(2)    Represents an adjustment to the carrying value of substantially all of the other current liabilities based on the final distribution of KC's remaining assets on April 3, 2020.
The major classes of KC's assets and liabilities included as part of discontinued operations as of March 31, 2020 are as follows:
MARCH 31
2020
Assets
Cash and cash equivalents$145 
Prepaid expenses and other current assets179 
Current assets of discontinued operations$324 
Liabilities
Accounts payable$63 
Lease termination liability791 
Other current liabilities245 
Current liabilities of discontinued operations$1,099 
v3.21.1
Fair Value Disclosure (Tables)
 3 Months Ended
Mar. 31, 2021
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table presents the Company's assets and liabilities accounted for at fair value on a recurring basis:
DescriptionBalance Sheet LocationMARCH 31
2021		 DECEMBER 31
2020		MARCH 31
2020
Assets:
Interest rate swap agreements
CurrentPrepaid expenses and other current assets$— $— $— 
Foreign currency exchange contracts
CurrentPrepaid expenses and other current assets— — 767 
$— $— $767 
Liabilities:
Interest rate swap agreements
CurrentOther current liabilities$333 $380 $362 
Long-termOther long-term liabilities591 779 818 
Foreign currency exchange contracts
CurrentOther current liabilities249 518 — 
$1,173 $1,677 $1,180 
v3.21.1
Stockholders' Equity (Tables)
 3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
Schedule of Capital Stock
The following table sets forth the Company's authorized capital stock information:
MARCH 31
2021		DECEMBER 31
2020		MARCH 31
2020
Preferred stock, par value $0.01 per share
Preferred stock authorized5,000 5,000 5,000 
Preferred stock outstanding— — — 
Class A Common stock, par value $0.01 per share
Class A Common stock authorized70,000 70,000 70,000 
Class A Common issued(1)(2)
10,186 10,006 9,917 
Treasury Stock365 365 365 
Class B Common stock, par value $0.01 per share, convertible into Class A on a one-for-one basis
Class B Common stock authorized30,000 30,000 30,000 
Class B Common issued(1)
4,037 4,045 4,074 
(1) Class B Common converted to Class A Common were 8 and 3 shares during the three months ending March 31, 2021 and 2020, respectively.
(2) The Company issued Class A Common shares of 172 and 108 during the three months ending March 31, 2021 and 2020, respectively.
Schedule of Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss: The following table summarizes changes in accumulated other comprehensive loss by component and related tax effects for periods shown:
 Foreign CurrencyDeferred Gain (Loss) on Cash Flow Hedging Pension Plan AdjustmentTotal
Balance, January 1, 2021$(9,775)$(1,344)$(6,357)$(17,476)
Other comprehensive income (loss)(276)222 — (54)
Reclassification adjustment to net income (loss)— 182 156 338 
Tax effects(79)(115)(43)(237)
Balance, March 31, 2021$(10,130)$(1,055)$(6,244)$(17,429)
Balance, January 1, 2020$(8,221)$(341)$(7,570)$(16,132)
Other comprehensive income (loss)(4,985)(171)— (5,156)
Reclassification adjustment to net income (loss)— 154 239 393 
Tax effects1,132 (35)(44)1,053 
Balance, March 31, 2020$(12,074)$(393)$(7,375)$(19,842)
v3.21.1
Revenue (Tables)
 3 Months Ended
Mar. 31, 2021
Revenue Recognition and Deferred Revenue [Abstract]  
Schedule of Disaggregation of Revenue
The following table sets forth Company's revenue on a disaggregated basis for the three months ended March 31:
THREE MONTHS ENDED
MARCH 31
 2021 2020
Type of good or service:
  Consumer products$139,513 $109,717 
  Commercial products8,593 9,918 
  Licensing1,143 1,211 
     Total revenues$149,249 $120,846 
v3.21.1
Basis of Presentation and Recently Issued Accounting Standards (Details) - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Debt Instrument [Line Items]      
Accumulated other comprehensive loss $ 17,429 $ 17,476 $ 19,842
Disposal Group, Held-for-sale, Not Discontinued Operations | Brazilian Subsidiary      
Debt Instrument [Line Items]      
Trade receivables, net 1,600    
Inventory 500    
Accumulated other comprehensive loss $ 2,500    
v3.21.1
Discontinued Operations - Income Statement Disclosures (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Income from discontinued operations, net of tax $ 0 $ 22,866
KC | Discontinued Operations    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Revenue   631
Cost of sales   0
Gross profit   631
Selling, general and administrative expenses   1,047
Adjustment of lease termination liability   (16,457)
Adjustment of other current liabilities   (6,608)
Operating income   22,649
Income from discontinued operations before income taxes   22,649
Income tax benefit   (217)
Income from discontinued operations, net of tax   $ 22,866
v3.21.1
Discontinued Operations - Balance Sheet Disclosures (Details) - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Assets      
Cash and cash equivalents $ 0   $ 145
Current assets of discontinued operations 0 $ 0 324
Liabilities      
Current liabilities of discontinued operations $ 0 $ 0 1,099
KC | Discontinued Operations      
Assets      
Cash and cash equivalents     145
Prepaid expenses and other current assets     179
Current assets of discontinued operations     324
Liabilities      
Accounts payable     63
Lease termination liability     791
Other current liabilities     245
Current liabilities of discontinued operations     $ 1,099
v3.21.1
Transfer of Financial Assets (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Transfers and Servicing [Abstract]      
Accounts receivable derecognized $ 29.8 $ 36.5 $ 162.4
v3.21.1
Fair Value Disclosure (Details) - Fair value measurements, recurring - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Mar. 31, 2020
Assets:      
Assets at fair value $ 0 $ 0 $ 767
Liabilities:      
Liabilities at fair value 1,173 1,677 1,180
Prepaid expenses and other current assets      
Assets:      
Interest rate swap agreements 0 0 0
Foreign currency exchange contracts 0 0 767
Other current liabilities      
Liabilities:      
Interest rate swap agreements 333 380 362
Foreign currency exchange contracts 249 518 0
Other long-term liabilities      
Liabilities:      
Interest rate swap agreements $ 591 $ 779 $ 818
v3.21.1
Stockholders' Equity - Schedule of Capital Stock (Details)
 3 Months Ended 12 Months Ended
Mar. 31, 2021
$ / shares
shares
Mar. 31, 2020
$ / shares
shares
Dec. 31, 2020
$ / shares
shares
Class of Stock [Line Items]      
Preferred stock, par value (in dollars per share) | $ / shares $ 0.01 $ 0.01 $ 0.01
Preferred stock authorized (in shares) 5,000,000 5,000,000 5,000,000
Preferred stock outstanding (in shares) 0 0 0
Class A Common stock      
Class of Stock [Line Items]      
Common stock, par value (in dollars per share) | $ / shares $ 0.01 $ 0.01 $ 0.01
Common stock authorized (in shares) 70,000,000 70,000,000 70,000,000
Common stock issued (in shares) 10,186,000 9,917,000 10,006,000
Treasury Stock (in shares) 365,000 365,000 365,000
Class A Common shares issued (in shares) 172,000 108,000  
Class B Common stock      
Class of Stock [Line Items]      
Common stock, par value (in dollars per share) | $ / shares $ 0.01 $ 0.01 $ 0.01
Common stock, convertible conversion ratio 1 1 1
Common stock authorized (in shares) 30,000,000 30,000,000 30,000,000
Common stock issued (in shares) 4,037,000 4,074,000 4,045,000
Class B Common converted to Class A Common (in shares) 8,000 3,000  
v3.21.1
Stockholders' Equity - Accumulated Other Comprehensive Income (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Beginning balance $ 80,105  
Other comprehensive income (loss) (54) $ (5,156)
Reclassification adjustment to net income (loss) 338 393
Tax effects (237) 1,053
Ending balance 82,699 53,396
Foreign Currency    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Beginning balance (9,775) (8,221)
Other comprehensive income (loss) (276) (4,985)
Reclassification adjustment to net income (loss) 0 0
Tax effects (79) 1,132
Ending balance (10,130) (12,074)
Deferred Gain (Loss) on Cash Flow Hedging    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Beginning balance (1,344) (341)
Other comprehensive income (loss) 222 (171)
Reclassification adjustment to net income (loss) 182 154
Tax effects (115) (35)
Ending balance (1,055) (393)
Pension Plan Adjustment    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Beginning balance (6,357) (7,570)
Other comprehensive income (loss) 0 0
Reclassification adjustment to net income (loss) 156 239
Tax effects (43) (44)
Ending balance (6,244) (7,375)
Accumulated Other Comprehensive Income (Loss)    
AOCI Attributable to Parent, Net of Tax [Roll Forward]    
Beginning balance (17,476) (16,132)
Ending balance $ (17,429) $ (19,842)
v3.21.1
Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Disaggregation of Revenue [Line Items]    
Revenue $ 149,249 $ 120,846
Commercial products    
Disaggregation of Revenue [Line Items]    
Revenue 8,593 9,918
HBB    
Disaggregation of Revenue [Line Items]    
Revenue 149,249 120,846
HBB | Consumer products    
Disaggregation of Revenue [Line Items]    
Revenue 139,513 109,717
HBB | Licensing    
Disaggregation of Revenue [Line Items]    
Revenue $ 1,143 $ 1,211
Maximum | Electric appliances    
Disaggregation of Revenue [Line Items]    
Warranty term 10 years  
Maximum | Product and Service, Other    
Disaggregation of Revenue [Line Items]    
Warranty term 3 years  
Minimum | Product and Service, Other    
Disaggregation of Revenue [Line Items]    
Warranty term 1 year  
v3.21.1
Contingencies (Details)
 1 Months Ended
May 03, 2019
USD ($)
Apr. 30, 2020
USD ($)
Feb. 29, 2020
USD ($)
lease
Mar. 31, 2021
USD ($)
Dec. 31, 2020
USD ($)
Mar. 31, 2020
USD ($)
Loss Contingencies [Line Items]            
Amount awarded to plaintiff $ 3,200,000 $ 300,000        
Accrual for contingent product infringement litigation costs       $ 3,100,000    
Number of leases allegedly breached | lease     49      
Amount of final judgment     $ 8,100,000      
Accrual for environmental investigation and remediation activities       3,100,000 $ 3,100,000 $ 4,200,000
Minimum            
Loss Contingencies [Line Items]            
Estimate of additional expenses       0    
Maximum            
Loss Contingencies [Line Items]            
Estimate of additional expenses       $ 1,700,000    
v3.21.1
Income Taxes (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Tax Disclosure [Abstract]    
Effective income tax rate reconciliation, percent 34.20% 24.90%
Effective income tax rate reconciliation, income tax penalties and interest expense $ 0.4  
v3.21.1
Subsequent Events (Details) - Subsequent Event - USD ($)
Apr. 09, 2021
Apr. 08, 2021
Subsequent Event [Line Items]    
Line of credit facility, maximum borrowing capacity $ 140,000,000 $ 125,000,000
Line of credit facility, accordion feature, term 60 days  
v3.21.1
Label Element Value
Restricted Cash and Cash Equivalents, Noncurrent us-gaap_RestrictedCashAndCashEquivalentsNoncurrent $ 378,000
Restricted Cash and Cash Equivalents, Noncurrent us-gaap_RestrictedCashAndCashEquivalentsNoncurrent 824,000
Restricted Cash and Cash Equivalents, Current us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue 210,000
Restricted Cash and Cash Equivalents, Current us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue $ 186,000