Hamilton Beach 2008 Annual Report Download - page 13

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Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer – NACCO Industries, Inc.
Michael P. Brogan
President and Chief Executive Officer – NACCO Materials Handling Group, Inc.
Dr. Michael J. Morecroft
President and Chief Executive Officer – Hamilton Beach Brands, Inc.
Randolph J. Gawelek
President and Chief Executive Officer – The Kitchen Collection, Inc.
Robert L. Benson
President and Chief Executive Officer – The North American Coal Corporation
the new Le Gourmet Chef format. The full-year impact of
efficiency and cost savings from the new Le Gourmet Chef
distribution center will also occur in 2009. In addition,
Kitchen Collection plans to aggressively renegotiate store lease
terms when needed to improve store profitability whenever
possible. Stores will be closed as leases expire if profitability
forecasts are not satisfactory.
Overall, Kitchen Collection expects a difficult first
quarter in 2009 with increasing improvements in quarterly
results for the remainder of the year. As such, an improvement
in full-year results compared with adjusted 2008 results
is expected. Cash flow before financing activities is expected
to be slightly negative in 2009, but significantly improved
compared with 2008.
Longer-Term Perspective
Kitchen Collection has two successful store formats
offering high-quality merchandise at competitive prices. In
addition, the company believes it has the right distribution
capabilities and marketing and promotional plans in place for
both the Kitchen Collection® and Le Gourmet Chef® formats.
Profitability at both store formats is expected to improve
significantly when consumer traffic and discretionary spending
increase. In addition, key long-term programs already in place
for the Kitchen Collection® store format, which are designed
to enhance merchandise mix, store displays and appearance,
and optimize store selling space, are expected to contribute to
increased profitability of both store formats. Accordingly, over
time Kitchen Collection should be in a sound position to attain
its long-term minimum financial goals. Kitchen Collection
also expects over the long term to achieve growth in the
number of Le Gourmet Chef® outlet and traditional mall
stores, although the total number of Kitchen Collection® and
Le Gourmet Chef® stores is unlikely to increase in 2009.
Conclusions and NACCO Outlook
These are clearly very difficult times. At NACCO, we are
proceeding as responsibly and carefully as possible, taking
necessary steps in the short term to ensure our subsidiaries’
longer-term programs remain in place. Most of these programs
are mature or should be maturing in the next one to two years
and are expected to position each subsidiary advantageously
as the economic recovery begins.
We are monitoring market levels constantly and are
prepared to take further steps, which are defined in well-
thought-out contingency plans, if needed. Conversely, when
markets and volumes turn up, NACCO’s businesses should be
well positioned to achieve their long-term financial objectives
after restoring employee benefits that have been suspended
or reduced to lower costs.
Further, we plan to focus on maximizing cash flow before
financing activities in 2009 and later years. In addition, all
subsidiaries are continuously monitoring compliance with debt
covenants, while optimizing working capital levels. Finally,
NACCO’s cash on hand provides flexibility with respect to
capitalizing its subsidiaries.
The Company’s goal is to reach its minimum financial
objectives for operating profit and significant cash flow
generation when markets return to more normalized levels.
While we are disappointed by the level of our current stock
price, we hope to see the price increase as results improve
through maturing improvement programs and the return
of stronger market conditions.
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We would like to take this opportunity to thank all of our
subsidiaries’ customers, retailers, dealers and suppliers and
NACCO stockholders for their continued support in these
difficult times. We would also like to express our profound
appreciation to all of our employees, who remain dedicated
and hard-working while making the sacrifices so vital to
preserving the strength and stability of our companies. We
will continue to work together to make 2009 as successful as
possible and look forward to strong financial performance
when meaningful economic recovery occurs in the United
States and around the world.