GARDEN CITY, N.Y., May 08, 2018 (GLOBE NEWSWIRE) -- Lifetime Brands, Inc. (NasdaqGS:LCUT), a leading global provider of branded kitchenware, tableware and other products used in the home, today reported its financial results for the first quarter ended March 31, 2018.

Consolidated net sales were $118.2 million, as compared to consolidated net sales of $113.4 million for the corresponding period in 2017. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased $2.2 million, or 1.9%, as compared to consolidated net sales in the corresponding period in 2017.

Gross margin was $45.1 million, or 38.2%, as compared to $43.9 million, or 38.8%, for the corresponding period in 2017.

Loss from operations was $13.3 million, as compared to a loss of $1.9 million for the corresponding period in 2017.

Net loss was $11.6 million, or $0.70 per diluted share, as compared to a net loss of $1.3 million, or $0.09 per diluted share, in the corresponding period in 2017.  

Adjusted net loss was $8.3 million, or $0.50 per diluted share, as compared to a loss of $1.3 million, or $0.09 per diluted share, in the corresponding period in 2017.

Consolidated adjusted EBITDA was $71.9 million for the twelve months ended March 31, 2018, after giving effect to the pro forma adjustments, permitted under our debt agreements, for the acquisition of Filament and projected synergies.

Equity in earnings, net of taxes, was $77 thousand, as compared to $540 thousand in the corresponding 2017 period.

Jeffrey Siegel, Lifetime's Executive Chairman, commented, “During the first quarter, we completed the acquisition of Filament Brands and embarked on an ambitious program to transform our Company by building on our newly expanded and diversified business. The first quarter includes the results from Filament since March 2, 2018, when the acquisition was completed.

“Our financial results for the quarter reflect the rapidly changing retail environment. In addition, as we have noted in past earnings releases, we believe first quarter results are not indicative of the outlook for the full year, as our most significant initiatives are scheduled for the third and fourth quarters. These plans are reflected in the financial guidance we are providing for 2018.

“As we begin to integrate and benefit from the combination of Filament into Lifetime and also begin to take advantage of our expanded portfolio of leading brands, increased scale, new sales opportunities and added efficiencies, we firmly believe that Lifetime and its stakeholders will benefit from having the most powerful platform in housewares across all channels, including e-commerce.”

Chief Executive Officer Rob Kay continued, “In the two months that has elapsed since Lifetime and Filament merged, we have begun taking many steps to align our business model and create a strong and unified company. Our initial actions have been focused on integrating and consolidating our U.S. organization, including certain business units, our salesforce, our e-commerce/retail direct activities and IT, and on integrating our operations in China. We already have announced our integration plans across our Company and have identified and notified impacted functions and individuals.

“We are pleased with the rapid progress we have made to date and believe we are on track to exceed the financial targets we announced in conjunction with the merger. As noted then, we expect to realize the bulk of the annualized $8.1 million in integration savings starting in 2019, when we go live with our SAP migration.  Throughout 2018, we will continue to move swiftly to implement our comprehensive plan for developing a stronger, more streamlined and even more effective Lifetime Brands.”

For the full fiscal year ending December 31, 2018, the Company is providing the following financial outlook:

Net sales$760 to $772 million
  
Income from operations$29 to $33 million
  
Net income$9 to $12 million
  
Diluted income per common share$0.45 to $0.61 per share
  
Adjusted net income$16 to $19 million
  
Adjusted diluted income per common share$0.81 to $0.96 per share
  
Pro forma adjusted EBITDA$77 to $81 million

Guidance for net sales is based on a forecasted GBP to USD exchange rate of $1.40. Guidance for income from operations, net income, adjusted net income, diluted income per common share and adjusted diluted income per common share is based on the Company’s preliminary valuation of the net assets acquired in the Filament acquisition. The final valuation of net assets may result in material adjustments to the respective fair values of the net assets, resulting goodwill, and deferred tax liability and amortization expense.

Net income, adjusted net income, diluted income per common share and adjusted diluted income per common share guidance was calculated based on an expected effective tax rate of 27.5%.

Pro forma adjusted EBITDA includes $8.1 million of projected synergies.

Conference Call

The Company has scheduled a conference call for May 8, 2018 at 11:00 a.m. ET. The dial-in number for the conference call is (844) 787-0801 or (661) 378-9632, passcode #1276546. A live webcast of the conference call will be accessible through https://edge.media-server.com/m6/p/y9cu55hp.  For those who cannot listen to the live broadcast, an audio replay of the webcast will be available.

Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures, including consolidated net sales in constant currency, adjusted net income, adjusted diluted income per common share, and consolidated adjusted EBITDA. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. As required by SEC rules, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in evaluating the Company's on-going financial results and trends, and management believes that exclusion of certain items allows for more accurate comparison of the Company’s operating performance. Management uses this non-GAAP information as an indicator of business performance.  These non-GAAP measures should be viewed as a supplement to, and not a substitute for, GAAP measures of performance.

Forward-Looking Statements

In this press release, the use of the words “believe,” "could," "expect," "may," "positioned," "project," "projected," "should," "will," "would" or similar expressions is intended to identify forward-looking statements. Such statements include all statements regarding our current and projected financial and operating performance and all guidance related thereto and our future plans and intentions regarding the Company and its consolidated subsidiaries. Such statements that represent the Company’s current judgment about possible future events. The Company believes these judgments are reasonable, but these statements are not guarantees of any events or financial results, and actual results may differ materially due to a variety of important factors. Such factors might include, among others, the Company’s ability to comply with the requirements of its credit agreements; the availability of funding under such credit agreements; the Company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the possibility of impairments to the Company’s goodwill; changes in U.S. or foreign trade or tax law and policy; changes in general economic conditions which could affect customer payment practices or consumer spending; the impact of changes in general economic conditions on the Company’s customers; expenses and other challenges relating to the integration of the Filament Brands business and future acquisitions; changes in demand for the Company’s products; changes in the Company’s management team; the significant influence of the Company’s largest stockholder; fluctuations in foreign exchange rates; changes in U.S. trade policy or the trade policies of nations in which we or our suppliers do business; shortages of and price volatility for certain commodities; significant changes in the competitive environment and the effect of competition on the Company’s markets, including on the Company’s pricing policies, financing sources and an appropriate level of debt. The Company undertakes no obligation to update these forward-looking statements other than as required by law.

Lifetime Brands, Inc.  

Lifetime Brands is a leading global provider of kitchenware, tableware and other products used in the home. The Company markets its products under well-known kitchenware brands, including Farberware®, KitchenAid®, Sabatier®, Amco Houseworks®, Chef'n® Chicago™ Metallic, Copco®, Fred® & Friends, Houdini™, KitchenCraft®, Kamenstein®, Kizmos™, La Cafetière®, MasterClass®, Misto®, Mossy Oak®, Swing-A-Way® Taylor® Kitchen and Vasconia®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Fitz and Floyd®, Creative Tops®, Empire Silver™, Gorham®, International® Silver, Kirk Stieff®, Rabbit® Towle® Silversmiths, Tuttle®, Wallace®, Wilton Armetale®, V&A® and Royal Botanic Gardens Kew®; and valued home solutions brands, including Bombay®, BUILT NY®, Taylor® Bath and Taylor® Weather. The Company also provides exclusive private label products to leading retailers worldwide.

The Company’s corporate website is www.lifetimebrands.com.

  
Contacts: 
  
Lifetime Brands, Inc.
Laurence Winoker, Chief Financial Officer 
516-203-3590 
investor.relations@lifetimebrands.com 
Lippert/Heilshorn& Assoc.
Harriet Fried, SVP
212-838-3777
hfried@lhai.com 
  

 

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands - except per share data)
(unaudited)

 Three Months Ended
 March 31,
 2018 2017
    
Net sales$  118,169 $  113,356
Cost of sales  73,082   69,415
Gross margin  45,087   43,941
Distribution expenses  17,822   13,433
Selling, general and administrative expenses  40,175   32,382
Restructuring expenses  406   -
Loss from operations  (13,316)   (1,874)
    
Interest expense  (2,103)   (941)
Loss on early retirement of debt  (66)   -
    
Loss before income taxes and equity in earnings  (15,485)   (2,815)
Income tax benefit  3,810   944
Equity in earnings, net of taxes  77   540
NET LOSS$  (11,598) $  (1,331)
Weighted-average shares outstanding - basic  16,601   14,396
BASIC LOSS PER COMMON SHARE $  (0.70) $  (0.09)
Weighted-average shares outstanding - diluted  16,601   14,396
DILUTED LOSS PER COMMON SHARE $  (0.70) $  (0.09)
Cash dividends declared per common share$  0.0425 $  0.0425
    

 

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands - except share data)

    March 31, December 31,
    2018 2017
    (unaudited)  
ASSETS   
CURRENT ASSETS   
 Cash and cash equivalents$  11,904 $  7,600
 Accounts receivable, less allowances of $6,164 at March 31, 2018 and $6,190 at December 31, 2017  87,622   108,033
 Inventory   177,567   132,436
 Prepaid expenses and other current assets   16,262   10,354
  TOTAL CURRENT ASSETS  293,355   258,423
       
PROPERTY AND EQUIPMENT, net  27,052   23,065
INVESTMENTS   24,517   23,978
INTANGIBLE ASSETS, net  371,087   88,479
DEFERRED INCOME TAXES  8,889   5,826
OTHER ASSETS  2,015   1,750
   TOTAL ASSETS$  726,915 $  401,521
       
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Current maturity of term loan$  1,285  $  - 
 Short term loan   151   69
 Accounts payable   34,119   25,461
 Accrued expenses   49,588   44,121
 Income taxes payable  104   1,864
  TOTAL CURRENT LIABILITIES  85,247   71,515
       
DEFERRED RENT & OTHER LONG-TERM LIABILITIES  20,569   20,249
DEFERRED INCOME TAXES  34,419   4,423
INCOME TAXES PAYABLE, LONG-TERM  311   311
REVOLVING CREDIT FACILITY  45,047   94,744
TERM LOAN  263,581   -
       
STOCKHOLDERS’ EQUITY   
 Preferred stock, $1.00 par value, shares authorized: 100 shares of Series A
  and 2,000,000 shares of Series B; none issued and outstanding		  -    - 
 Common stock, $.01 par value, shares authorized: 50,000,000 at March 31, 2018 and 
  December 31, 2017; shares issued and outstanding: 20,605,877 at March 31, 2018 
  and 14,902,527 at December 31, 2017		  206   149
 Paid-in capital  255,408   178,909
 Retained earnings   48,068   60,546
 Accumulated other comprehensive loss   (25,941)   (29,325)
  TOTAL STOCKHOLDERS’ EQUITY  277,741   210,279
   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$  726,915 $  401,521
       


LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

    Three Months Ended
    March 31, 
    2018 2017
OPERATING ACTIVITIES   
 Net loss$  (11,598) $  (1,331)
 Adjustments to reconcile net loss to net cash provided by operating activities:
   
  Extraordinary gain   
  Depreciation and amortization  4,309   3,286
  Amortization of financing costs  220   217
  Deferred rent  370   (140)
  Stock compensation expense  838   804
  Undistributed equity in earnings, net   (77)   (540)
  Loss on early retirement of debt  66   - 
 Changes in operating assets and liabilities (excluding the effects of business acquisitions)   
  Accounts receivable  48,119   43,044
  Inventory  (17,303)   (18,648)
  Prepaid expenses, other current assets and other assets  (1,476)   (1,073)
  Accounts payable, accrued expenses and other liabilities  (7,050)   (18,135)
  Income taxes receivable  -    (132)
  Income taxes payable  (3,880)   (1,373)
    NET CASH PROVIDED BY OPERATING ACTIVITIES   12,538   5,979
INVESTING ACTIVITIES   
 Purchases of property and equipment  (2,408)   (373)
 Filament acquisition, net of cash acquired  (217,932)   - 
   NET CASH USED IN INVESTING ACTIVITIES  (220,340)   (373)
FINANCING ACTIVITIES   
 Proceeds from revolving credit facility  73,725   66,298
 Repayments of revolving credit facility  (123,938)   (70,620)
 Proceeds from Term Loan  275,000   - 
 Repayment of Credit Agreement term loan  -    (2,500)
 Proceeds from short term loan  79   119
 Payment of financing costs  (11,049)   (29)
 Payment of equity issuance costs  (929)   - 
 Payments for capital leases  (24)   - 
 Payments of tax withholding for stock based compensation  (258)   - 
 Proceeds from exercise of stock options  -    92
 Cash dividends paid   (652)   (613)
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   211,954   (7,253)
Effect of foreign exchange on cash  152   53
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  4,304   (1,594)
Cash and cash equivalents at beginning of period  7,600   7,883
CASH AND CASH EQUIVALENTS AT END OF PERIOD$  11,904 $  6,289
       


LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)

Reconciliation of GAAP to Non-GAAP Operating Results

Consolidated adjusted EBITDA for the twelve months ended March 31, 2018:

 Consolidated adjusted EBITDA for the Four Quarters Ended
March 31, 2018
Three months ended March 31, 2018$  (529)
Three months ended December 31, 2017  29,767
Three months ended September 30, 2017  26,500
Three months ended June 30, 2017  8,100
Pro forma projected synergies  8,100
Total for the four quarters$  71,938
  


             
    March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 Twelve Months ended
March 31, 2018
Net income (loss) as reported $  (11,598) $  1,251 $  4,330 $  (2,096) $  (8,113)
 Subtract out:          
  Undistributed equity in (earnings) losses, net   (77)   265   326   (430)   84
 Add back:           
  Income tax expense (benefit)   (3,810)   8,169   3,505   (1,698)   6,166
  Interest expense    2,103   1,177   1,172   1,001   5,453
  Loss on early retirement of debt   66   -    -    110   176
  Depreciation and amortization   4,309   3,468   4,063   3,348   15,188
  Stock compensation expense   838   908   952   726   3,424
  Unrealized loss on foreign currency contracts   393   169   897   1,456   2,915
  Other permitted non-cash charges   287   -    -    -    287
  Permitted acquisition related expenses   809   2,424   166   (9)   3,390
  Permitted cash charges   2,825   1,331   272   409   4,837
  Pro forma Filament adjustment    3,326   10,605   10,817   5,283   30,031
  Twelve Months ended March 31, 2018, Pro forma projected synergies   -    -    -    -    8,100
 Consolidated adjusted EBITDA $  (529) $  29,767 $  26,500 $  8,100 $  71,938
             

Consolidated adjusted EBITDA is a non-GAAP measure which is defined in the Company’s debt agreements. Adjusted EBITDA is defined as net income (loss), adjusted to exclude undistributed equity in earnings (losses), income taxes, interest, losses on early retirement of debt, depreciation and amortization, stock compensation expense, unrealized loss on foreign currency contracts, permitted cash charges such as severance expense, warehouse relocation costs, transition expenses and restructuring expenses, and a non-cash purchase accounting adjustment to step-up the fair value of acquired inventory. Consolidated adjusted EBITDA includes pro forma adjustments, permitted under the debt agreements, for the acquisition of Filament and projected cost savings, operating expense reductions, restructuring charges and expenses and cost saving synergies projected by the Company as a result of actions taken through March 31, 2018 or expected to be taken as of March 31, 2018, net of the benefits realized during the three months ended March 31, 2018.


LIFETIME BRANDS, INC.
Supplemental Information
(In thousands- except per share data)

 Reconciliation of GAAP to Non-GAAP Operating Results (continued)

Adjusted net loss and adjusted diluted loss per common share:

   
  Three Months Ended
  March 31,
  2018 2017
     
Net loss as reported$  (11,598) $  (1,331)
  Adjustments:   
 Acquisition related expenses  809   35
 Restructuring expenses  406   - 
 Integration charges  35   - 
 Warehouse relocation  2,384   - 
 Loss on early retirement of debt  66   - 
 Non-cash purchase accounting charges  287   - 
 Unrealized loss on foreign currency contracts  393   295
 Deferred tax for foreign currency translation for Grupo Vasconia  (195)   (255)
 Income tax effect on adjustments  (872)   (71)
Adjusted net loss$  (8,285) $  (1,327)
Adjusted diluted loss per common share$  (0.50) $  (0.09)
     

Adjusted net loss in the three months ended March 31, 2018 excludes acquisition related expenses, restructuring expenses, integration charges, warehouse relocation expenses, loss on retirement of debt, non-cash purchase accounting charges, the unrealized loss on foreign currency contracts and the deferred tax for foreign currency translation for Grupo Vasconia.  Adjusted net loss in the three months ended March 31, 2017 excludes acquisition related expenses, the unrealized loss on foreign currency contracts and the deferred tax for foreign currency translation for Grupo Vasconia.


Constant Currency:

   As Reported Constant Currency (1)           
  Three Months Ended  Three Months Ended    Year-Over-Year 
  March 31, March 31,   Increase (Decrease)
Net sales2018 2017 Increase (Decrease) 2018 2017 Increase (Decrease) Currency Impact Excluding Currency  Including Currency  Currency Impact 
U.S. Wholesale$  90,795 $  87,392 $  3,403 $  90,795 $  87,407 $  3,388 $  15   3.9 %    3.9 %    -  % 
International  21,846   21,228   618   21,846   23,807   (1,961)   2,579   (8.2) %    2.9 %    11.1 % 
Retail Direct  5,528   4,736   792   5,528   4,736   792   -    16.7 %    16.7 %    -  % 
Total net sales$  118,169 $  113,356 $  4,813 $  118,169 $  115,950 $  2,219 $  2,594   1.9 %    4.2 %    2.3 % 
                        
(1)"Constant Currency" is determined by applying the 2018 average exchange rates to the prior year local currency sales amounts, with the difference between the change in "As Reported" net sales and "Constant Currency" net sales,  reported in the table as "Currency Impact". Constant currency sales growth excludes the impact of currency. 
                        

 

LIFETIME BRANDS, INC.
Supplemental Information
(in millions, except per share data)

Reconciliation of GAAP to Non-GAAP Guidance

Adjusted net income and adjusted diluted earnings per share guidance for the full fiscal year ending December 31, 2018:

Net income guidance $9 to $12 
Adjustments:  
 Acquisition related expenses 1.3
 Restructuring and integration expenses 3.3
 Warehouse relocation 2.4
 Loss on early retirement of debt 0.1
 Non-cash purchase accounting charges 1.7
 Unrealized loss on foreign currency contracts 0.4
 Deferred tax for foreign currency translation for Grupo Vasconia (0.2)
 Income tax effect on adjustments (2.0)
Adjusted net income guidance $16 to $19 
Adjusted diluted loss per common share guidance $0.81 to $0.96 
   


Consolidated adjusted EBITDA guidance for the full fiscal year ending December 31, 2018:

Net income guidance $9 to $12 
 Subtract out:  
  Undistributed equity in earnings (1.1)
 Add back:   
  Income tax expense 3.2 to 4.2 
  Interest expense  18.0
  Loss on early retirement of debt 0.1
  Depreciation and amortization 24.0
  Stock compensation expense 4.0
  Unrealized loss on foreign currency contracts 0.4
  Other permitted non-cash charges 1.7
  Permitted acquisition related expenses 1.3
  Permitted cash charges  5.7
  Pro forma Filament adjustment  3.3
  Pro forma projected synergies 7.4
 Pro forma consolidated adjusted EBITDA guidance $77 to $81 
    

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