Thank you for standing by. At this time, I would like to welcome everyone to the Hamilton Beach Brands Holding Company Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Lou Anne Nabhan, you may begin your conference.

Thank you, Sheryl. Good morning, everyone. Welcome to our second quarter 2023 earnings conference call and webcast. Yesterday, after the market closed, we issued our second quarter 2023 earnings release and filed our 10-Q with the SEC. Both copies are available on our website. Our speakers today are Greg Trepp, President and Chief Executive Officer; and Sally Cunningham, Senior Vice President and Chief Financial Officer. Our presentation today includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in either the prepared remarks or during the Q&A. Additional information regarding these risks and uncertainties is available in our earnings release and 10-Q and our annual report on Form 10-K for the year ended December 31, 2022. The company disclaims any obligation to update these forward-looking statements, which may not be updated until our next quarterly conference call, if at all. And now I'll turn the call over to Greg.

Thank you, Lou Anne. Good morning, everyone. Thank you for joining us. I will take the next few minutes to provide an overview of our performance for the second quarter of 2023 and discuss our expectations for the remainder of the year. Then, Sally will discuss our financials in more detail. After that, we will take your questions. As we've discussed in our previous calls this year, we expected a solid performance for the full year 2023, but a soft first half. Our revenue outlook for the full year remains the same, flat to 2022, with increased revenue in the second half of this year, offsetting the decrease in the first half. Year-to-date, our performance for inventory, debt and cash flow has been stronger than expected. In the second quarter, total revenue decreased 7.1%. Geographically, revenue declined in the U.S., Latin America and Canadian markets, mostly driven by lower unit volume. Revenue increased in our Mexican market as a result of our new placements our team secured for this year. In the U.S., many of our large retail customers managed overall inventory levels conservatively across all categories early in the quarter and orders were reduced compared to last year. These actions were a response to being too long in inventory last year due to supply chain issues and as inflation and high interest rates created uncertainty about consumer demand. The situation improved as the second quarter unfolded. June was a strong month, we believe, setting the stage for our expected stronger second half. In Latin America, many retailers, and one of our largest customers, in particular, continued to rebalance excess inventories created by last year's supply chain disruptions. In the global commercial market, revenue decreased. We attribute this to a normalization of demand as compared to last year's second quarter,…

Great. Thank you, Greg. Good morning, everyone. I'll start with our second quarter 2023 results compared to the second quarter of 2022. Net sales for the second quarter of 2023 were $137.1 million compared to $147.5 million for the prior year. The decrease was primarily driven by overall lower unit volumes in most of our markets, which resulted from the previously mentioned soft consumer demand and retailer rebalancing. Gross profit was $27.4 million or 20% of total revenue compared to $32 million or 21.7% in the prior year. Margin contraction was due to unfavorable customer and product mix, resulting in a lower average margin, the impact of lower volume on fixed cost coverage and a non-cash lease impairment charge of $500,000 related to the consolidation of warehouses. Selling, general and administrative expenses of $26.6 million was flat compared to the second quarter of 2022. Higher employee related expenses were offset by lower outside service expense. Operating profit in the quarter was $700,000 compared to $5.4 million last year, reflecting the gross profit contraction. Net interest expense of $800,000 was $100,000 less than last year, reflecting a significant decrease in average debt compared to June 30, 2022, offset by higher interest rates. Other expense net was flat compared to 2022 and includes currency gains of $400,000 in the current year. The effective tax rate on income was 50.9% this year compared to a benefit of 5.8% last year. The effective tax rate was higher this year due to a discrete benefit from the reversal of interest and penalties on unrecognized tax benefits in the prior year that did not recur and a discrete expense in the current year for state income tax. Net income for the second quarter was $100,000 or $0.01 per diluted share compared to net income of $5.1…

There are no audio questions at this time. I will now turn the call over to Greg Trepp for closing remarks.

Thank you. In closing, I want to recap the reasons we are excited about the second half of this year. We have a strong stable of owned brands, anchored by our flagship brands Hamilton Beach and Proctor Silex. We also have a strong suite of partnership brands that have allowed us to gain share in the premium segment of the market, as well as enter new categories. Our Bartesian and Numilk partnerships benefit both our consumer and commercial markets. We have been awarded incremental placements and promotions across a wide range of categories and a broad group of North American retail customers in brick-and-mortar, omnichannel and eCommerce only channels. We have also grown our customer base within our global commercial businesses. We expect these wins to have a positive impact on our results in the third and fourth quarters. We benefit from our leadership in the small kitchen appliance industry, which has a long history of strong, durable demand. That concludes the report for today. Thank you again for joining our call.

This concludes today's conference call. Thank you for your participation. You may now disconnect.