Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Beach Brands First Quarter 2023 Earnings Conference Call. All lines have been place on mute to prevent any background noise. After the speaker’s remarks there will be question-and-answer session. [Operator Instructions] Thank you. Lou Anne Nabhan, Head of Investor Relations you may begin your conference.

Thank you, Emma, and good morning, everyone. Welcome to our first quarter 2023 earnings conference call and webcast. Yesterday, after the market closed, we issued our first quarter 2023 earnings release and filed our 10-Q with the SEC. 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. Also participating in the Q&A will be Scott Tidey, Senior Vice President Global Sales. 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 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 will turn the call over to Greg.

Thank you, Lou Anne. Good morning, everyone. Thank you for joining us. I plan to take the next few minutes to provide an overview of our performance for the first 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. During our last earnings call, I discussed that we expected a solid full year for the soft first half, with the first quarter being the most challenging period. As a result of the expected continuation of both soft consumer demand and retailer inventory rebalancing, our total revenue decreased 12.4%. Early in the first quarter many large retailers significantly reduced their orders as they continue to rebalance their inventory levels in connection with finalizing their fiscal year 2022 results. Retailer order patterns rebounded to more normalized levels as the first quarter unfolded. Our company has also made good progress addressing the inventory challenges from last year, which were driven by supply chain disruptions. We gained strong momentum in the fourth quarter of 2022 and entered this year in a good position. In the first quarter, we further reduced our inventory levels and at a slightly better rate than anticipated. We ended the first quarter with inventory at $132 million compared to $196 million at the end of last year's first quarter and our peak of $244 million at the end of September. Our debt came down as well. At the end of March, our debt was $79 million. If you recall, we said in our last call, we expected to end the first quarter at approximately $90 million, and we were pleased to beat that estimate. We delivered strong cash flow before financing in the first quarter of $34.3 million compared to…

Great. Thank you, Greg. Good morning, everyone. I'll start with our first quarter 2023 results compared to the first quarter of 2022. Net sales for the first quarter of 2023 were $128.3 million compared to $146.4 million for the prior year. This decrease was primarily driven by overall lower unit volume resulting from the previously mentioned soft consumer demand and retailer rebalancing early in the quarter. Gross profit was $20.9 million or 16.3% of total revenue, compared to $28.2 million or 19.3% in the prior year. Margin compression was due to unfavorable customer and product mix and de-leveraging of fixed charges. These were offset slightly by lower expenses for outside warehousing and labor compared to the prior year due to lower inventory levels. Selling, general and administrative expenses were $25.9 million for the first quarter of 2023, compared to $15.4 million in the prior year. As previously disclosed in the first quarter of 2022, we recorded a $10 million insurance recovery. Excluding the insurance recovery, the first quarter 2022 SG&A was $25.4 million. Operating loss in the first quarter was $5.1 million, compared to operating profit in the prior year of $12.7 million or $2.7 million excluding the insurance recovery. Net interest expense increased from $1.3 million compared to $700,000 due to higher interest rates offset by lower average debt compared to the prior year. Other expense was $16,000 for the first quarter compared to $1.5 million in the prior year. First quarter 2022 included losses driven by the liquidation of our former Brazilian subsidiary which did not recur in 2023. The effective tax rate on loss was 24.7% for the first quarter of 2023 compared to 32% on income for the prior year. The first quarter 2022 effective tax rate was unfavorably impacted by interest and penalties on unrecognized…

Thank you, Emma. Hamilton Beach Brands has invested in the people and best practices to ensure we develop consumer-preferred products that have the right balance of trusted branding, innovation and quality to offer to our customers and consumers, at the right price. As the company has expanded into more categories and price points, we have increased the attractiveness of our company to serve the needs of our customers. In 2023, we are very pleased to have been awarded incremental placements and promotions across a wide range of categories, and a wide range of North American customers in brick-and-mortar, omni-channel and e-commerce retailers. We've also experienced very nice progress increasing our customer base, within our global commercial business. We expect these gains to positively impact on the company in the third and fourth quarters. We continue to pursue additional promotions focused on the peak holiday period. That concludes our report today. Thank you again, for joining our call.

This concludes today's conference call. You may now disconnect.