Lifetime Brands, Inc. Reports Second Quarter Financial Results

GARDEN CITY, N.Y., Aug. 08, 2017 (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 second quarter ended June 30, 2017.

Second Quarter Financial Highlights:

Consolidated net sales were $117.4 million, as compared to consolidated net sales of $118.1 million in the corresponding period in 2016. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased 1.5%, as compared to consolidated net sales in the corresponding period in 2016.

Gross margin was $42.8 million, or 36.5%, as compared to $43.0 million, or 36.4%, for the corresponding period in 2016.

Loss from operations was $3.1 million, as compared to a loss of $0.3 million for the corresponding period in 2016.

Net loss was $2.1 million, or $0.14 per diluted share, as compared to a net loss of $1.2 million, or $0.08 per diluted share, in the corresponding period in 2016.  

Adjusted net loss was $0.8 million, or $0.05 per diluted share, as compared to adjusted net loss of $80 thousand, or $0.01 per diluted share, in the corresponding period in 2016.

Consolidated EBITDA was $1.4 million, as compared to $5.2 million for the corresponding 2016 period.

Equity in earnings, net of taxes, was $0.5 million, as compared to $18 thousand in the corresponding 2016 period.

Six Months Financial Highlights:

Consolidated net sales were $230.7 million, as compared to consolidated net sales of $229.0 million for the corresponding period in 2016.  In constant currency, consolidated net sales increased 3.3%.

Gross margin was $86.7 million, or 37.6%, as compared to $83.5 million, or 36.5%, for the corresponding period in 2016.

Loss from operations was $5.0 million, as compared to a loss of $5.5 million, for the corresponding period in 2016.

Net loss was $3.4 million, or $0.24 per diluted share, as compared to a loss of $5.5 million, or $0.39 per diluted share, in the 2016 period. 

Adjusted net loss was $2.0 million, or $0.14 per diluted share, as compared to a loss of $3.6 million, or $0.26 per diluted share, in the 2016 period. 

Consolidated EBITDA was $3.6 million, as compared to $5.5 million for the corresponding 2016 period.

Equity in earnings, net of taxes, was $1.0 million, as compared to equity in losses, net of taxes, of $132 thousand in the corresponding 2016 period.

Jeffrey Siegel, Lifetime's Chairman and Chief Executive Officer, commented,

“We are pleased with the Company’s results for the second quarter, which generally matched our expectations, despite a difficult retail environment.

“Net sales in constant dollars increased 1.5% and gross margin increased to 36.5%. We believe the net sales growth in the period, albeit modest, reflects increases in our market share, as many of our large brick and mortar customers reported negative retail sales growth for the period.

“The second quarter 2017 financial results include an unrealized foreign currency loss of $1.5 million, compared to a gain of $0.2 million in the 2016 quarter. These amounts represent mark-to-market adjustments on GBP/USD forward currency contracts related to purchases of inventory. The adjustments will reverse as the forward contracts are settled in the ordinary course of business and, therefore, are not expected to have a permanent economic impact.

“We are especially pleased with the growth in our global e-commerce business, which includes sales both to pure-play e-commerce retailers and to omnichannel retailers. While most omnichannel retailers do not provide information as to the percentages of their sales of our products sold through their e-commerce websites, we believe e-commerce sales currently represent approximately 15% of our total sales, a percentage significantly greater than the estimate for e-commerce sales as a percentage of overall U.S. retail sales, and are increasing at a double-digit annual rate. As e-commerce sales continue to grow in importance, we believe the significant investments we have made in the infrastructure, staffing and data resources necessary to compete effectively in this arena, have uniquely positioned Lifetime to become an important strategic partner to global e-commerce retailers.

“Lifetime Next™, our strategic growth and profitability enhancement initiative, is proceeding apace. We expect to see the benefits of this program reflected in the Company’s financial results beginning later this year and, in a more meaningful way, in 2018 and 2019.

“We continue to make good progress in the integration of our UK businesses. Earlier this summer, we took several important actions, including consolidating national account managers, sales teams, and warehouse management; and, this month, we successfully transitioned KitchenCraft to our SAP platform, which will enable KitchenCraft and Creative Tops to function more easily as an integrated business. Also, in the quarter, management eliminated certain low margin product lines, resulting in a substantial inventory reserve adjustment.  The final step in the integration process will be the consolidation of several legacy distribution centers into a new, purpose-built distribution center. Plans now are underway for this new facility, which is expected to open in early 2019.

“Our new West Coast distribution center rapidly is nearing completion. We plan to begin shipping from this new location early next year.

“While we continue to be optimistic about the Company’s performance in the second half of the year, we are increasingly mindful of the difficult retail environment in North America and Europe and therefore are adjusting our guidance to reflect full year consolidated net sales growth of approximately 1.5% (excluding foreign currency impact) and gross margin improvement of approximately 50 basis points. Based upon this sales volume; distribution and SG&A expenses as a percentage of sales should be slightly higher than in 2016.”

Dividend        

On Friday, August 4, 2017, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on November 15, 2017 to shareholders of record on November 1, 2017.

Conference Call

The Company has scheduled a conference call for Tuesday, August 8, 2017 at 11:00 a.m. ET. The dial-in number for the conference call is call is (844) 787-0801 or (661) 378-9632, passcode # 56005964. A live webcast of the conference call will be accessible through http://edge.media-server.com/m/p/dr78pkhq/lan/en.  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 loss, adjusted diluted loss 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 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; 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; changes in demand for the Company’s products; 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.

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®, Chicago™ Metallic, Copco®, Fred® & Friends, Kitchen Craft®, Kamenstein®, Kizmos™, La Cafetière®, MasterClass®, Misto®, Mossy Oak®, Swing-A-Way® and Vasconia®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Creative Tops®, Empire Silver™, Gorham®, International® Silver, Kirk Stieff®, Towle® Silversmiths, Tuttle®, Wallace®, Wilton Armetale®, V&A® and Royal Botanic Gardens Kew®; and valued home solutions brands, including Bombay®, BUILT NY® and Debbie Meyer® . The Company also provides exclusive private label products to leading retailers worldwide.

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

Consolidated adjusted EBITDA is a non-GAAP measure that the Company defines 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, contingent consideration, certain acquisition related expenses, restructuring expenses and non-restructuring severance expense, as shown in the tables above.

Adjusted net loss in the three and six months ended June 30, 2017 excludes acquisition related expenses, loss on early retirement of debt, restructuring expenses, non-restructuring severance expense, the unrealized loss on foreign currency contracts and deferred tax benefit related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation gains through other comprehensive income (loss). Adjusted loss in the three and six months ended June 30, 2016 excludes acquisition related expenses, loss on early retirement of debt, restructuring expenses, unrealized gain on foreign currency contracts and deferred tax expense related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income (loss).