CLEVELAND— With an eye on creating opportunities for growth and greater access to capital, NACCO Industries has proposed a spin-off of Hamilton Beach and The Kitchen Collection.
According to the company, Hamilton Beach Brands Holding Company would operate as an independent public company and own and operate the Hamilton Beach brand along with The Kitchen Collection. NACCO Industries said it would not receive any proceeds from the spin-off and expects the spin-off to be completed during the third quarter of this year.
According to the preliminary prospectus on the Hamilton Beach spin-off from NACCO, the move is expected to create greater flexibility for Hamilton Beach to pursue strategic growth opportunities such as acquisitions and joint ventures within the housewares industry.
Other benefits include access to capital and capital structure, the ability to implement CEO succession, enhance the recruitment and retaining of employees and have a management team focused on Hamilton Beach and the housewares segment.
The move by NACCO to spin-off Hamilton Beach comes just weeks after the company reported solid results for its fiscal second quarter.
For the three months ended June 30, total revenue was $127.6 million, slightly up from revenue of $127.1 million in the second quarter of 2016. Net income was $3.2 million, up from net income of $2.9 million in the comparable quarter the previous year.
During an investor conference call, company officials said the increase in revenue stems from lower costs and an increase in sales of higher margin, higher priced electrics that served to boost gross profit.
For the first six months of its current fiscal year, the small electrics supplier reported revenue of $241.7 million, down slightly from net revenue of $242.8 million in the first half of 2016. Net income for the first half was $3.9 million, up from net income of $2.7 million for the first six months of the prior year.
Looking at the remainder of 2017, company officials said they expect the U.S. and Canadian consumer retail markets for small electrics to be comparable to the second half of last year. Moderate growth is expected in the international and commercial markets.
In addition, the company expects sales to continue to shift from in-store channels to e-commerce sales channels. The result of this factor, coupled with new products in the pipeline, is expected to result in an increase in sales volume and revenue for the back half of the year when compared to the final six months of 2016.
“These increases are expected to be slightly more than the anticipated market growth due to enhanced distribution and increased higher margin product placements,” company officials said.