Hamilton Beach has filed a Form 12b-25 with the U.S. Securities and Exchange Commission for extension of time to file its quarterly report on Form 10-Q for the three-month period ended March 31. The company said it discovered accounting irregularities with respect to the timing of recognition of selling and marketing expenses and the classification of certain expenditures within the statement of operations at its Mexican subsidiary.
The company’s audit review committee has commenced an internal investigation, with the assistance of outside counsel and other third-party experts, primarily focused on realizability of certain assets of the Mexican subsidiary in order to determine the impact these matters may have on financial results. Net sales of the Mexican subsidiary represented about 7% of the company’s total net sales in 2019.
Although the company is working to complete the investigation and file the Form 10-Q as soon as possible, the company stated that it does not anticipate being in a position to file the Form 10-Q on or before the fifth calendar date following the required filing date as prescribed in Rule 12b-25. Hamilton Beach will also delay its first quarter 2020 earnings release and investor conference call.
In terms of business trends, Hamilton Beach noted that the first quarter began with strong momentum across all markets, but momentum slowed as government, in March, implemented measures to control the spread of the coronavirus. The company estimated that first quarter revenue decreased 4% to 5% compared to the 2019 first quarter. Consumer demand was strong for many small kitchen appliance segments in the U.S. and Canada, however, as stay-at-home orders led to an increased focus on needs such as food and beverage preparation.
Due to the evolving COVID-19 pandemic and related economic uncertainty, Hamilton Beach has withdrawn its full-year 2020 outlook, but said it believes it is well positioned to continue effectively navigating the COVID-19 pandemic.