Hamilton Beach Brands Holding

Thank you for standing by. At this time, I would like to welcome everyone to today's Hamilton Beach Brands second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Thank you. So without further ado, I would like to turn the call over to Avanti Chiruvelith, Vice President with ICR. Avanti, you have the floor.

Thanks, Gillian. Good afternoon, everyone, and welcome to the second quarter 2026 Earnings Conference call and webcast for Hamilton Beach Brands. Earlier today, after the stock market closed, we issued our second quarter 2026 earnings release, which is available on our corporate website. Our speakers today are Scott Tidey, President and CEO, and Sally Cunningham, Senior Vice President, Chief Financial Officer, and Treasurer. Our presentation today includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in either our prepared remarks or during the Q&A. Additional information regarding these risks and uncertainties is available in our 10Q, our earnings release, and our annual report on Form 10-K for the year ended December 31st, 2025. The company disclaims any obligation to update these forward-looking statements, which may not be updated until our quarterly conference call, our next quarterly conference call, if at all. The company also discusses certain non-GAAP measures. Reconciliation for Regulation G purposes can be found in our earnings release. And now I'll turn the call over to Scott. Scott?

Thank you, Avanti, and good afternoon, everyone. Thank you for joining us today. We are pleased to report a solid second quarter, highlighted by meaningful improvement in our underlying operating performance, even before considering a significant one-time tariff refund we received during the quarter. Net sales increased low double digits driven primarily by the recovery of U.S. consumer volumes that we lost in the second quarter of last year. As you will recall, several retailers paused purchasing to reevaluate their inventory levels in response to the tariff environment at that time. We also experienced a nice improvement in gross margin. In Q2, we again benefited from our foreign trade zone, selling inventory that wasn't subject to additional tariff charges, in addition to other tariff mitigation actions, including diversifying our sourcing strategy and selectively raising prices. This margin expansion more than offset increased investments in marketing and some non-operational expenses that Sally will detail shortly to deliver higher operating profit than a year ago. As you saw from our earnings release, our reported results benefited from refunds following the U.S. Supreme Court's February ruling on IEPA tariffs. We are very pleased to have received these funds, especially after the amount of work and cost we incurred after they were implemented in April of 2025. Our current plan is to reinvest a portion of these proceeds back into the business to help drive long-term growth. Turning now to our five strategic growth pillars, I want to update you on the progress we made in each of them during the second quarter. Starting with driving growth of our core business, our new product pipeline continues to progress well. We remain on track to launch two new single serve coffee platforms in the second half of the year, which will bring much needed innovation to that category. We're also pleased with the initial results from our recent placements at a leading mass market retailer, and we've added shelf space at two of the top wholesale membership clubs, both of which we mentioned last quarter. We're also ramping up with our new advertising agency, which will help oversee and drive our digital marketing strategy, providing significant awareness of the Hamilton Beach brand starting in the second half of the year. Moving to gaining a larger share in the premium market. We launched Lotus Professional to the broader market during the second quarter, building on strong results we saw from last year's initial rollout. We remain on track to launch Lotus Signature in the fourth quarter of this year and early next year. And we continue to believe the premium category represents a significant long-term growth opportunity given our still small share of that market. At the same time, our Qi business is also building momentum. A leading mass market retailer continues to support three Qi steam irons and three Qi garment steamers in stores and online. and we've expanded the online assortment with the new Qi Collapsible Steamer and Qi Deluxe Retractable Cord Steamer. Another national retailer added the Qi Travel Steamer in the second quarter while a leading warehouse club added the Qi Lava 360 Precision Iron online earlier this year. Also, based on strong results from a recent test at a top department store, we're expanding the Qi 360 Precision Iron to all of their doors in the third quarter. Turning to leading in the global commercial market, we are on track to add our Clips Blender at a leading national coffee chain, while at the same time we picked up a spindle mixer placement at a leading US fast food company's Central America locations. And as we anniversary the launch of our Sunkist commercial juicers and sectionizers, that business continues to exceed our expectation. In new product news, We are launching our high performance Titan food processor in the fourth quarter targeting the roughly 90 million global food processor market. We believe our features and pricing will be highly competitive and interest from several regional food chains soon testing the product has been higher than any new product launch we've seen in years. In hospitality, we've recently added our irons and hair dryers to a national hotel chain across approximately 770 U.S. locations, and now we're pursuing the same program with six to seven additional flagship chains. Moving to accelerating our digital transformation. We're advancing three coordinated initiatives to make sure Hamilton Beach stays discoverable and preferred as consumers shopping shifts to AI driven search. First, we're scaling AI optimized content across our catalog. with a 500 SKU content build underway to structure our products for discovery on leading AI platforms. Second, we're piloting paid AI advertising as a new growth channel, running a controlled three-month test on ChatGPT's newly launched ad platform to inform a scale decision ahead of the fourth quarter. And third, were building the measurement infrastructure to give us product level visibility into how AI platforms recommend us versus our competitors so we can turn this investment into a measurable driver of revenue. Finally, on accelerating growth of Hamilton Beach Health. The second quarter marked the fourth consecutive quarter of profitable growth for this business, and we are on track to increase sales by 50% this year. We've now managed more than 1.2 million injections and that number is projected to keep growing as we continue to make excellent progress, expanding our reach by adding more specialty pharmacy and pharmaceutical company partnerships. And as announced last quarter, we are broadening our connected medical device platform beyond our core injectable medication management with the third quarter pilot launch of our pill management platform. which is designed to improve medication adherence and provide valuable patient feedback. We are initially targeting dermatology and rheumatology treatment areas with plans to expand to other therapeutic areas as we validate the platform's effectiveness. This expansion represents a significant opportunity to address additional patient pain points and grow our distribution network with large specialty pharmacies. In closing, we are pleased with the underlying momentum in the business. With the investment we are making in promotions and marketing, we believe we are still well positioned to continue driving top line growth in the back half of the year and beyond. I want to thank our teams for their continued hard work and execution this quarter. Their efforts to navigate a still evolving tariff environment while improving our margins and profitability reflect the resilience and commitment that defines our organization. With that, I'll turn it over to Sally.