Lifetime Brands, Inc. Reports First Quarter 2013 Results
Company Reaffirms Sales Guidance for 2013
Board of Directors Authorizes
-
Consolidated net sales for the quarter were
$98.7 million , a decrease of$10.3 million , or 9.4%, as compared to$109.0 million for the corresponding period in 2012. -
Net loss for the quarter was
$632 thousand , as compared to net income of$1.3 million for the corresponding period in 2012. -
Diluted net income (loss) per common share was
$(0.05) , as compared to$0.11 for the corresponding period in 2012.
Lifetime’s Board of Directors has authorized a program to repurchase up
to
“Lifetime’s first quarter financial results were in line with our expectations. As I previously have noted, comparing quarterly results with prior periods can be misleading, as our sales in any one period can be heavily influenced by the timing of promotions and the roll-out of new programs.
“Revenues in the first quarter included net sales of
“Net sales at Creative Tops decreased by
“Our outlook for the year remains unchanged. We continue to foresee 2013
net sales increasing by 4-6%, based on modest improvements in the
outlook for the U.S. economy and in the
“The new stock repurchase program affirms our commitment to delivering shareholder value, as well as our continued confidence in Lifetime’s business strategy to generate long-term, profitable growth by developing our brands, delivering innovative new products, investing in our systems and pursuing acquisitions that add new product categories or provide opportunities to expand into new international markets.”
Conference Call
The Company has scheduled a conference call for
Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. For purposes of Regulation G, 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. Pursuant to the requirements of Regulation G, 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. Management uses this non-GAAP information as an indicator of business 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.
The Company’s corporate website is www.lifetimebrands.com.
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LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands - except per share data) (unaudited) |
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| Three Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2013 | 2012 | |||||||||||||
| Net sales | $ | 98,657 | $ | 109,041 | ||||||||||
| Cost of sales | 62,345 | 68,581 | ||||||||||||
| Gross margin | 36,312 | 40,460 | ||||||||||||
| Distribution expenses | 10,796 | 11,744 | ||||||||||||
| Selling, general and administrative expenses | 25,631 | 25,484 | ||||||||||||
| Income (loss) from operations | (115 | ) | 3,232 | |||||||||||
| Interest expense | (1,162 | ) | (1,698 | ) | ||||||||||
| Income (loss) before income taxes and equity in earnings | (1,277 | ) | 1,534 | |||||||||||
| Income tax benefit (provision) | 399 | (588 | ) | |||||||||||
| Equity in earnings, net of taxes | 246 | 398 | ||||||||||||
| NET INCOME (LOSS) | $ | (632 | ) | $ | 1,344 | |||||||||
| BASIC INCOME (LOSS) PER COMMON SHARE | $ | (0.05 | ) | $ | 0.11 | |||||||||
| DILUTED INCOME (LOSS) PER COMMON SHARE | $ | (0.05 | ) | $ | 0.11 | |||||||||
| Cash dividends declared per common share | $ | 0.03125 | $ | 0.05 | ||||||||||
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LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands - except share data) (unaudited) |
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| March 31, | December 31, | ||||||||||||
| 2013 | 2012 | ||||||||||||
|
(unaudited) |
|||||||||||||
| ASSETS | |||||||||||||
| CURRENT ASSETS | |||||||||||||
| Cash and cash equivalents | $ | 2,428 | $ | 1,871 | |||||||||
|
Accounts receivable, less allowances of $3,751 at March 31, 2013 and |
|||||||||||||
| $3,996 at December 31, 2012 | 62,152 | 97,369 | |||||||||||
| Inventory | 104,043 | 104,584 | |||||||||||
| Prepaid expenses and other current assets | 5,570 | 5,393 | |||||||||||
| Income taxes receivable | 1,319 | - | |||||||||||
| Deferred income taxes | 3,524 | 3,542 | |||||||||||
| TOTAL CURRENT ASSETS | 179,036 | 212,759 | |||||||||||
| PROPERTY AND EQUIPMENT, net | 30,907 | 31,646 | |||||||||||
| INVESTMENTS | 45,608 | 43,685 | |||||||||||
| INTANGIBLE ASSETS, net | 57,169 | 57,842 | |||||||||||
| OTHER ASSETS | 2,829 | 2,865 | |||||||||||
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TOTAL ASSETS |
$ | 315,549 | $ | 348,797 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| CURRENT LIABILITIES | |||||||||||||
| Revolving Credit Facility | $ | 7,000 | $ | 7,000 | |||||||||
| Current maturity of Senior Secured Term Loan | 5,250 | 4,375 | |||||||||||
| Accounts payable | 18,125 | 18,555 | |||||||||||
| Accrued expenses | 26,957 | 33,354 | |||||||||||
| Income taxes payable | - | 3,615 | |||||||||||
| TOTAL CURRENT LIABILITIES | 57,332 | 66,899 | |||||||||||
| DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 20,256 | 21,565 | |||||||||||
| DEFERRED INCOME TAXES | 3,556 | 3,510 | |||||||||||
| REVOLVING CREDIT FACILITY | 31,339 | 53,968 | |||||||||||
| SENIOR SECURED TERM LOAN | 29,750 | 30,625 | |||||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||||
|
Preferred stock, $.01 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding |
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- |
- |
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Common stock, $.01 par value, shares authorized: 25,000,000; shares issued and outstanding: 12,818,864 at March 31, 2013 and 12,754,467 at December 31, 2012 |
128 | 128 | |||||||||||
| Paid-in capital | 143,461 | 142,489 | |||||||||||
| Retained earnings | 32,812 | 33,849 | |||||||||||
| Accumulated other comprehensive loss | (3,085 | ) | (4,236 | ) | |||||||||
| TOTAL STOCKHOLDERS’ EQUITY | 173,316 | 172,230 | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 315,549 | $ | 348,797 | |||||||||
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LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) |
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| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2013 | 2012 | |||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | $ | (632 | ) | $ | 1,344 | |||||||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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| Provision for doubtful accounts | 32 | (25 | ) | |||||||||
| Depreciation and amortization | 2,523 | 2,207 | ||||||||||
| Deferred rent | (199 | ) | (84 | ) | ||||||||
| Stock compensation expense | 671 | 698 | ||||||||||
| Undistributed equity earnings | (246 | ) | (398 | ) | ||||||||
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Changes in operating assets and liabilities (excluding the effects of business acquisitions) |
||||||||||||
| Accounts receivable | 35,185 | 4,872 | ||||||||||
| Inventory | 541 | (3,316 | ) | |||||||||
| Prepaid expenses, other current assets and other assets | 29 | 410 | ||||||||||
| Accounts payable, accrued expenses and other liabilities | (8,009 | ) | (55 | ) | ||||||||
| Income taxes payable | (4,933 | ) | (2,356 | ) | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 24,962 | 3,297 | ||||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Purchases of property and equipment | (1,187 | ) | (475 | ) | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (1,187 | ) | (475 | ) | ||||||||
| FINANCING ACTIVITIES | ||||||||||||
| Repayments of bank borrowings, net | (22,629 | ) | (1,080 | ) | ||||||||
| Proceeds from the exercise of stock options | 302 | 22 | ||||||||||
| Cash dividend paid | (319 | ) | (311 | ) | ||||||||
| NET CASH USED IN FINANCING ACTIVITIES | (22,646 | ) | (1,369 | ) | ||||||||
| Effect of foreign exchange on cash | (572 | ) | 442 | |||||||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 557 | 1,895 | ||||||||||
| Cash and cash equivalents at beginning of year | 1,871 | 2,972 | ||||||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 2,428 | $ | 4,867 | ||||||||
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LIFETIME BRANDS, INC. Supplemental Information (In thousands) |
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| Consolidated EBITDA for the four quarters ended | ||||||
| March 31, 2013 | ||||||
| Three months ended March 31, 2013 | $ | 3,079 | ||||
| Three months ended December 31, 2012 | 17,868 | |||||
| Three months ended September 30, 2012 | 11,568 | |||||
| Three months ended June 30, 2012 | 5,584 | |||||
| Total for the four quarters | $ | 38,099 | ||||
| Consolidated EBITDA for the four quarters ended | ||||||
| March 31, 2012 | ||||||
| Three months ended March 31, 2012 | $ | 6,222 | ||||
| Three months ended December 31, 2011 | 14,342 | |||||
| Three months ended September 30, 2011 | 13,524 | |||||
| Three months ended June 30, 2011 | 7,512 | |||||
| Total for the four quarters | $ | 41,600 | ||||
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Reconciliation of GAAP to Non-GAAP Operating Results |
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| Three Months Ended | |||||||||||||||||||
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March 31, 2013 |
December 31, 2012 |
September 30,
2012 |
June 30,
2012 |
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| Net income (loss) as reported | $ | (632 | ) | $ | 15,154 | $ | 3,890 | $ | 559 | ||||||||||
| Subtract out: | |||||||||||||||||||
| Undistributed equity earnings | (246 | ) | (4,464 | ) | (695 | ) | (108 | ) | |||||||||||
| Add back: | |||||||||||||||||||
| Income tax provision (benefit) | (399 | ) | 2,596 | 1,930 | 94 | ||||||||||||||
| Interest expense | 1,162 | 1,254 | 1,271 | 1,675 | |||||||||||||||
| Depreciation and amortization | 2,523 | 2,446 | 2,409 | 2,262 | |||||||||||||||
| Stock compensation expense | 671 | 662 | 679 | 754 | |||||||||||||||
| Loss on early retirement of debt | - | - | 1,015 | 348 | |||||||||||||||
| Intangible asset impairment | - | - | 1,069 | - | |||||||||||||||
| Permitted acquisition related expenses | - | 220 | - | - | |||||||||||||||
| Consolidated EBITDA | $ | 3,079 | $ | 17,868 | $ | 11,568 | $ | 5,584 | |||||||||||
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LIFETIME BRANDS, INC. Supplemental Information (In thousands)
Reconciliation of GAAP to Non-GAAP Operating Results (continued) |
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| Three Months Ended | |||||||||||||||||||
|
March 31,
2012 |
December 31, 2011 |
September 30,
2011 |
June 30,
2011 |
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| Net income as reported | $ | 1,344 | $ | 5,419 | $ | 7,533 | $ | 2,063 | |||||||||||
| Subtract out: | |||||||||||||||||||
| Undistributed equity earnings | (398 | ) | (925 | ) | (1,113 | ) | (393 | ) | |||||||||||
| Add back: | |||||||||||||||||||
| Income tax provision | 588 | 3,513 | 2,089 | 1,108 | |||||||||||||||
| Interest expense | 1,698 | 1,951 | 1,789 | 2,039 | |||||||||||||||
| Depreciation and amortization | 2,207 | 2,336 | 2,046 | 2,020 | |||||||||||||||
| Stock compensation expense | 698 | 690 | 682 | 675 | |||||||||||||||
| Permitted acquisition related expenses | 85 | 1,358 | 498 | - | |||||||||||||||
| Consolidated EBITDA | $ | 6,222 | $ | 14,342 | $ | 13,524 | $ | 7,512 | |||||||||||
Consolidated EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity earnings, income taxes, interest, depreciation and amortization, stock compensation expense and acquisition related expenses, as shown in the table above.
Source:
Lifetime Brands, Inc.
Laurence Winoker, 516-203-3590
Chief
Financial Officer
investor.relations@lifetimebrands.com
or
Lippert/Heilshorn
& Assoc.
Harriet Fried, 212-838-3777
SVP
hfried@lhai.com