Hamilton Beach Brands (NYSE:HBB) reported fourth-quarter and full-year 2025 results that management said exceeded internal expectations, marking what executives described as a key step in recovering from tariff-related disruptions that affected demand and retailer ordering patterns earlier in the year.
Fourth-quarter results show sequential improvement
Revenue in the fourth quarter was $212.9 million, down slightly from $213.5 million in the year-ago period, a decline of about 30 basis points. Management emphasized the sequential improvement versus the prior quarters, when sales fell 18% in the second quarter and 15% in the third quarter after a 4% increase in the first quarter.
Gross profit rose 8% year over year to $60.2 million, and gross margin increased 220 basis points to 28.3%. Cunningham attributed the margin improvement to favorable product and customer mix tied to growth in Commercial and Health, labor and logistics efficiencies, and a margin benefit from the timing of price increases.
Selling, general, and administrative expenses increased to $34.7 million from $32.1 million, driven primarily by higher performance-based compensation accruals in the fourth quarter, along with $1.5 million of additional advertising and $1.6 million related to accelerated depreciation and write-off tied to the company’s legacy ERP system. Those costs were partially offset by restructuring actions taken in the second quarter, according to the CFO.
Operating profit increased 8% to $25.4 million, and operating margin expanded 90 basis points to 11.9%.
Net income for the quarter was $18.5 million, or $1.38 per diluted share, compared with $24.0 million, or $1.75 per diluted share, a year earlier. Cunningham said the year-over-year change in income tax expense was largely driven by a $4.3 million foreign tax benefit and a change in U.S. tax accounting method that benefited the year-ago period.
2025 reflects tariff-driven disruption, but management points to underlying stability
For full-year 2025, revenue was $606.9 million, down 7.3% from $654.7 million in 2024. Tidey said the decline was driven by lower volumes in the U.S. consumer business as retailers adjusted ordering patterns in response to higher tariffs, including what he described as a six-week period in April and May when purchasing was suspended at the height of tariff uncertainty.
Full-year gross margin was 25.7%, down 30 basis points, which management highlighted as a relatively modest decline given the company incurred $5.3 million of one-time incremental tariffs in 2025.
On a reported basis, operating profit was $36.6 million (6% of sales) versus $43.2 million (6.6% of sales) in 2024. However, management emphasized an adjusted view that excludes the one-time incremental tariff expense and the $1.6 million accelerated depreciation and write-off related to the ERP transition. On that basis, Cunningham said 2025 operating profit would have increased to $43.5 million, or 7.2% of sales, while Tidey said operating profit would have been $0.3 million above 2024 levels.
Full-year net income was $26.5 million, or $1.95 per share, compared with $30.8 million, or $2.20 per share, in 2024. Effective tax rates were 25.8% in 2025 and 7.8% in 2024, reflecting the non-recurring foreign tax benefit and change in tax accounting method in 2024, according to Cunningham.
Commercial, Health, and Premium initiatives highlighted
Tidey said the fourth quarter reflected improved mix and momentum in the Commercial and Health divisions, and he reiterated the company’s strategy to diversify beyond the core consumer appliance business.
- Commercial: The company said its Commercial business represented about 10% of total revenue and grew more than 15% for the year, led by the Summit Edge blender. Tidey also highlighted an agreement with Sunkist to develop and market Sunkist-branded commercial juicers and sectionizers, launched in the second quarter, with demand that he said continued to exceed expectations.
- Health: Tidey said Hamilton Beach Health achieved positive operating profit in the third quarter of 2025—about 18 months after the HealthBeacon acquisition—and again in the fourth quarter. He attributed the performance to expanded specialty pharmacy partnerships (including new agreements with Synerwell and Lumicera), the launch of HealthBeacon Harmony software products with Novartis, and a 50% increase in the patient subscription base during the year.
- Premium: Tidey said the company’s premium business made “a major step forward” with the launch of the Lotus brand, with initial sales exceeding expectations by “strong double digits.” He said a key retailer committed to increasing shelf space. In the Q&A, Tidey described Lotus as “completely incremental,” citing distinct positioning, retailers, and price points relative to the core brands.
Supply chain flexibility and tariff exposure
Tidey said the company made progress reducing tariff exposure by diversifying manufacturing away from China and building flexibility to shift production among China, Vietnam, Thailand, and Indonesia based on economics. He said tariffs were “currently at parity across the APAC countries” the company sources from, and described the ability to move manufacturing as a “core competency” that allows faster reaction if tariff rates change.
2026 outlook: mid-single-digit growth targeted, with notable headwinds and investments
Looking ahead, management said it expects revenue to return to the company’s historical mid-single-digit growth rate in 2026, even with an expected roughly $22 million sales headwind from the expiration of the company’s license agreement with Bartesian at the end of 2025. Cunningham said growth is expected to be weighted toward the second and third quarters, assuming a more stable U.S. operating environment.
Gross margin in 2026 is expected to be similar to slightly better than 2025. However, Cunningham said reported operating profit is expected to decline by a low-teens percentage, including about $6 million of accelerated depreciation related to the legacy ERP system and an incremental $6 million in planned advertising spend, particularly in the second half of 2026.
In the Q&A, Tidey said the incremental advertising is expected to be split about 40/60 between premium and core brands. Cunningham said the ERP-related accelerated depreciation is tied to upgrading the company’s ERP platform to enable benefits from emerging technologies once the transition is complete.
On cash flow, the company expects cash flow from operating activities less cash used for investing activities to be $35 million to $45 million in 2026, reflecting what Cunningham described as an “outsized increase” due to normalization of tariff-related impacts on working capital.
In response to analyst questions about retailer behavior, Tidey said big-box partners appear to be “back to business as normal,” with promotions and inventory levels that “seem to be similar” to typical patterns. Asked whether the fourth-quarter sales improvement reflected restocking or end demand, Tidey said point-of-sale trends were “pretty consistent with what we saw.”
About Hamilton Beach Brands (NYSE:HBB)
Hamilton Beach Brands Holding Company is a designer, marketer and distributor of branded small kitchen and household appliances. The company’s product portfolio spans a range of countertop and electric appliances, including blenders, mixers, toasters, coffeemakers, slow cookers, air fryers, and specialty beverage machines. Through the Hamilton Beach and Proctor-Silex brands, the company serves both everyday consumers and commercial foodservice operators.
Established in 1910, Hamilton Beach has introduced a number of innovations in small-appliance technology, from early electric drink mixers to modern immersion blenders and multi-function cookers.
