In a first quarter impacted by the coronavirus pandemic, Hamilton Beach saw its sales pick up momentum and then slow later in the quarter, but still reported that overall the U.S. consumer market drove results.
Consolidated net income was $21.5 million, or $1.58 per diluted share, compared to a net loss of $3.4 million, or $0.25 per diluted share in the previous first quarter. Net loss from continuing operations was $1.4 million, or $0.10 per diluted share, compared to a net loss of $0.7 million, or $0.05 per diluted share.
The first quarter began with strong momentum and with revenue trending ahead of prior year, the company said. Many U.S. customers increased inventory positions early in the year due to anticipated coronavirus-related disruptions in the supply chain in China. In March, momentum slowed across all markets as government measures to control the spread of COVID-19 were implemented. As a result, total revenue decreased 4.6% to $120.8 million compared to $126.6 million last year. Revenue from the U.S. and Canada consumer markets held steady compared to the prior year, while the international consumer and global commercial markets decreased.
Total revenue in the second quarter is expected to increase approximately 5.5% compared to $131.1 million last year. The U.S. consumer market continues to drive the company’s overall results, and the Canada consumer market has also experienced increased demand. In the U.S. consumer market, demand has surged as consumers continue to stay home and cook more during the pandemic. Hamilton Beach said it has seen strong demand for its slow cookers, blenders, food processors, hand mixers and coffee makers, among others, and demand has increased substantially for certain specialty appliances, such as bread makers and electric pasta makers.
During the quarter ended March 31, 2020, the company said it discovered certain accounting irregularities at its Mexico subsidiaries. The company’s Audit Review Committee commenced an internal investigation with the assistance of outside counsel and other third party experts. The company concluded that certain former employees of one of the Mexico subsidiaries engaged in unauthorized transactions with the company’s Mexico subsidiaries that resulted in expenditures being deferred on the balance sheet beyond the period for which the costs pertained. As a result, the company recorded non-cash write-offs in its historical consolidated financial statements and restated its financial statements for the years ended December 31, 2019, 2018 and 2017 and each of the quarters during the years ended December 31, 2019 and 2018.