Lifetime Brands, Inc. Reports First Quarter Financial Results
Reaffirms 2015 Sales Guidance of 3-6% Growth
-
Consolidated net sales were
$117.7 million , as compared to consolidated net sales of$118.4 million for the corresponding period in 2014. In constant currency, net sales were$120.4 million , an increase of$2.0 million , or 1.7%, as compared to the corresponding 2014 period. -
Gross margin was
$44.9 million , or 38.2%, as compared to$44.3 million , or 37.4%, for the corresponding period in 2014. -
Loss from operations was
$2.2 million in both the 2015 and 2014 periods. -
Net loss was
$2.1 million , or$0.15 per diluted share, as compared to$2.9 million , or$0.22 per diluted share, in the corresponding period in 2014. -
Adjusted net loss was
$1.9 million , or$0.14 per diluted share, as compared to$1.7 million , or$0.13 per diluted share, in the corresponding period in 2014. -
Consolidated EBITDA was
$2.5 million , as compared to$3.7 million for the corresponding 2014 period. -
Equity in earnings, net of taxes, was
$288,000 , as compared to equity in losses, net of taxes of$208,000 , in the corresponding 2014 period.
“Lifetime’s financial results for the three months ended
“Net sales for the U.S. Wholesale segment for the three months ended
“Net sales for the U.S. Wholesale’s Kitchenware product category were
“Net sales for the U.S. Wholesale’s Tableware product category were
“Net sales for U.S. Wholesale’s Home Solutions product category were
“Net sales for the International segment were
“Net sales for the Retail Direct segment were
"Our retailer partners generally are showing confidence in a strong Holiday selling season, which we see reflected in strong bookings and placements for products to be delivered later this year. Based on these indications, we currently forecast that, for the full year 2015, net sales are likely to increase by 3% to 6%, reaffirming the guidance we provided on our fourth quarter conference call. We expect our operating margin to be in the range of 4.5 to 5.5%.”
Conference Call
The Company has scheduled a conference call for
Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. 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
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.
|
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Net sales | $ | 117,657 | $ | 118,411 | ||||||
| Cost of sales | 72,749 | 74,079 | ||||||||
| Gross margin | 44,908 | 44,332 | ||||||||
| Distribution expenses | 13,483 | 12,346 | ||||||||
| Selling, general and administrative expenses | 33,596 | 34,183 | ||||||||
| Loss from operations | (2,171 | ) | (2,197 | ) | ||||||
| Interest expense | (1,431 | ) | (1,390 | ) | ||||||
| Financing expense | (154 | ) | - | |||||||
| Loss on early retirement of debt | - | (319 | ) | |||||||
| Loss before income taxes and equity in earnings | (3,756 | ) | (3,906 | ) | ||||||
| Income tax benefit | 1,363 | 1,185 | ||||||||
| Equity in earnings (losses), net of taxes | 288 | (208 | ) | |||||||
| NET LOSS | $ | (2,105 | ) | $ | (2,929 | ) | ||||
| Weighted-average shares outstanding - basic | 13,738 | 13,274 | ||||||||
| BASIC LOSS PER COMMON SHARE | $ | (0.15 | ) | $ | (0.22 | ) | ||||
| Weighted-average shares outstanding - diluted | 13,738 | 13,274 | ||||||||
| DILUTED LOSS PER COMMON SHARE | $ | (0.15 | ) | $ | (0.22 | ) | ||||
| Cash dividends declared per common share | $ | 0.0375 | $ | 0.0375 | ||||||
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LIFETIME BRANDS, INC. |
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| March 31, | December 31, | ||||||||||
| 2015 | 2014 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | 3,415 | $ | 5,068 | |||||||
|
Accounts receivable, less allowances of $6,375 at March 31, 2015
and |
78,761 | 107,211 | |||||||||
| Inventory | 142,997 | 137,924 | |||||||||
| Prepaid expenses and other current assets | 11,462 | 7,914 | |||||||||
| Deferred income taxes | 420 | - | |||||||||
| TOTAL CURRENT ASSETS | 237,055 | 258,117 | |||||||||
| PROPERTY AND EQUIPMENT, net | 26,317 | 26,801 | |||||||||
| INVESTMENTS | 27,970 | 28,155 | |||||||||
| INTANGIBLE ASSETS, net | 101,851 | 103,597 | |||||||||
| OTHER ASSETS | 4,539 | 4,732 | |||||||||
| TOTAL ASSETS | $ | 397,732 | $ | 421,402 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Current maturity of Credit Agreement Term Loan | $ | 10,000 | $ | 10,000 | |||||||
| Short term loan | 480 | 765 | |||||||||
| Accounts payable | 27,155 | 28,694 | |||||||||
| Accrued expenses | 32,393 | 36,961 | |||||||||
| Deferred income taxes | 2,551 | 2,293 | |||||||||
| Income taxes payable | 60 | 5,156 | |||||||||
| TOTAL CURRENT LIABILITIES | 72,639 | 83,869 | |||||||||
| DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 20,303 | 20,160 | |||||||||
| DEFERRED INCOME TAXES | 1,485 | 1,485 | |||||||||
| REVOLVING CREDIT FACILITY | 85,279 | 92,655 | |||||||||
| CREDIT AGREEMENT TERM LOAN | 32,500 | 35,000 | |||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||
|
Preferred stock, $.01 par value, shares authorized: 100 shares of
Series A |
- | - | |||||||||
|
Common stock, $.01 par value, shares authorized: 25,000,000; shares |
139 | 137 | |||||||||
| Paid-in capital | 162,970 | 160,315 | |||||||||
| Retained earnings | 35,078 | 37,703 | |||||||||
| Accumulated other comprehensive loss | (12,661 | ) | (9,922 | ) | |||||||
| TOTAL STOCKHOLDERS’ EQUITY | 185,526 | 188,233 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 397,732 | $ | 421,402 | |||||||
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LIFETIME BRANDS, INC. |
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Three Months Ended |
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| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| OPERATING ACTIVITIES | ||||||||||
| Net loss | $ | (2,105 | ) | $ | (2,929 | ) | ||||
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||||
| Provision for doubtful accounts | 18 | 50 | ||||||||
| Depreciation and amortization | 3,555 | 3,613 | ||||||||
| Amortization of financing costs | 149 | 149 | ||||||||
| Deferred rent | 346 | (274 | ) | |||||||
| Deferred income taxes | - | (179 | ) | |||||||
| Stock compensation expense | 750 | 726 | ||||||||
| Undistributed equity in losses, net | (288 | ) | 208 | |||||||
| Loss on early retirement of debt | - | 319 | ||||||||
|
Changes in operating assets and liabilities (excluding the effects of business acquisitions) |
||||||||||
| Accounts receivable | 27,355 | 19,218 | ||||||||
| Inventory | (6,468 | ) | (3,068 | ) | ||||||
| Prepaid expenses, other current assets and other assets | (3,593 | ) | (3,755 | ) | ||||||
| Accounts payable, accrued expenses and other liabilities | (4,407 | ) | (10,197 | ) | ||||||
| Income taxes payable | (5,071 | ) | (2,947 | ) | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 10,241 | 934 | ||||||||
| INVESTING ACTIVITIES | ||||||||||
| Purchases of property and equipment | (1,431 | ) | (1,156 | ) | ||||||
| Kitchen Craft acquisition, net of cash acquired | - | (59,856 | ) | |||||||
| Other acquisitions, net of cash acquired | - | (5,280 | ) | |||||||
| Net proceeds from sale of property | 25 | - | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (1,406 | ) | (66,292 | ) | ||||||
| FINANCING ACTIVITIES | ||||||||||
| Proceeds from Revolving Credit Facility | 61,523 | 78,657 | ||||||||
| Repayments of Revolving Credit Facility | (68,899 | ) | (43,458 | ) | ||||||
| Repayments of Senior Secured Term Loan | - | (20,625 | ) | |||||||
| Proceeds from Credit Agreement Term Loan | - | 50,000 | ||||||||
| Repayment of Credit Agreement Term Loan | (2,500 | ) | - | |||||||
| Proceeds from Short Term Loan | 37 | - | ||||||||
| Payments on Short Term Loan | (322 | ) | - | |||||||
| Payment of financing costs | - | (1,375 | ) | |||||||
| Proceeds from exercise of stock options | 281 | 1,200 | ||||||||
| Cash dividends paid | (514 | ) | (501 | ) | ||||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (10,394 | ) | 63,898 | |||||||
| Effect of foreign exchange on cash | (94 | ) | 736 | |||||||
| DECREASE IN CASH AND CASH EQUIVALENTS | (1,653 | ) | (724 | ) | ||||||
| Cash and cash equivalents at beginning of period | 5,068 | 4,947 | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,415 | $ | 4,223 | ||||||
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LIFETIME BRANDS, INC. |
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| Consolidated EBITDA for the | ||||
| Four Quarters Ended | ||||
| March 31, 2015 | ||||
| Three months ended March 31, 2015 | $ | 2,519 | ||
| Three months ended December 31, 2014 | 20,918 | |||
| Three months ended September 30, 2014 | 16,470 | |||
| Three months ended June 30, 2014 | 1,494 | |||
| Total for the four quarters | $ | 41,401 | ||
| Consolidated EBITDA for the | ||||
| Four Quarters Ended | ||||
|
March 31, 2014 (1) |
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| Three months ended March 31, 2014 | $ | 3,660 | ||
| Three months ended December 31, 2013 | 21,011 | |||
| Three months ended September 30, 2013 | 15,067 | |||
| Three months ended June 30, 2013 | 4,321 | |||
| Total for the four quarters | $ | 44,059 | ||
(1) Consolidated EBITDA for the four quarters ended
|
Reconciliation of GAAP to Non-GAAP Operating Results |
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Consolidated EBITDA: |
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| Three Months Ended | ||||||||||||||||||||
| March 31, 2015 |
December 31, |
September 30, |
June 30, |
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| Net income (loss) as reported | $ | (2,105 | ) | $ | 9,261 | $ | (1,586 | ) | $ | (3,202 | ) | |||||||||
| Subtract out: | ||||||||||||||||||||
| Undistributed equity in (earnings) losses, net | (288 | ) | 1,364 | 5,193 | (41 | ) | ||||||||||||||
| Add back: | ||||||||||||||||||||
| Income tax provision (benefit) | (1,363 | ) | 5,473 | 3,123 | (1,586 | ) | ||||||||||||||
| Interest expense | 1,431 | 1,658 | 1,698 | 1,672 | ||||||||||||||||
| Loss on early retirement of debt | - | 27 | - | - | ||||||||||||||||
| Financing expense | 154 | 758 | - | |||||||||||||||||
| Intangible asset impairment | - | - | 3,384 | - | ||||||||||||||||
| Depreciation and amortization | 3,555 | 3,572 | 3,299 | 3,716 | ||||||||||||||||
| Stock compensation expense | 750 | 2,360 | 694 | 713 | ||||||||||||||||
| Contingent consideration accretion | 147 | (4,115 | ) | 665 | - | |||||||||||||||
| Permitted acquisition related expenses | 238 | 560 | - | 97 | ||||||||||||||||
| Restructuring expenses | - | - | - | 125 | ||||||||||||||||
| Consolidated EBITDA | $ | 2,519 | $ | 20,918 | $ | 16,470 | $ | 1,494 | ||||||||||||
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LIFETIME BRANDS, INC. |
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Reconciliation of GAAP to Non-GAAP Operating Results (continued) |
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Consolidated EBITDA: |
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| Three Months Ended | ||||||||||||||||||||
|
March 31, |
December 31, |
September 30, |
June 30, |
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| Net income (loss) as reported | $ | (2,929 | ) | $ | 9,388 | $ | 1,093 | $ | (568 | ) | ||||||||||
| Subtract out: | ||||||||||||||||||||
| Undistributed equity in (earnings) losses, net | 208 | (332 | ) | 5,452 | 480 | |||||||||||||||
| Add back: | ||||||||||||||||||||
| Income tax provision (benefit) | (1,185 | ) | 6,182 | 3,869 | (477 | ) | ||||||||||||||
| Interest expense | 1,390 | 1,256 | 1,280 | 1,149 | ||||||||||||||||
| Loss on early retirement of debt | 319 | 102 | - | - | ||||||||||||||||
| Intangible asset impairment | - | - | - | - | ||||||||||||||||
| Depreciation and amortization | 3,613 | 2,708 | 2,517 | 2,667 | ||||||||||||||||
| Stock compensation expense | 726 | 750 | 738 | 722 | ||||||||||||||||
| Contingent consideration accretion | - | - | - | - | ||||||||||||||||
| Permitted acquisition related expenses | 1,518 | 957 | 39 | 60 | ||||||||||||||||
| Restructuring expenses | - | - | 79 | 288 | ||||||||||||||||
| Consolidated EBITDA | $ | 3,660 | $ | 21,011 | $ | 15,067 | $ | 4,321 | ||||||||||||
Consolidated 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, intangible asset impairment, accretion of contingent consideration, acquisition related expenses and restructuring expenses, as shown in the tables above.
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LIFETIME BRANDS, INC. |
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Reconciliation of GAAP to Non-GAAP Operating Results (continued) |
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Adjusted net loss and adjusted diluted loss per common share: |
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| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Net loss as reported | $ | (2,105 | ) | $ | (2,929 | ) | ||||
| Adjustments: | ||||||||||
| Acquisition related expenses | 238 | 1,518 | ||||||||
| Financing expenses | 154 | - | ||||||||
| Loss on early retirement of debt | - | 319 | ||||||||
| Income tax effect on adjustments | (157 | ) | (657 | ) | ||||||
| Adjusted net loss | $ | (1,870 | ) | $ | (1,749 | ) | ||||
| Adjusted diluted loss per common share | $ | (0.14 | ) | $ | (0.13 | ) | ||||
Adjusted net loss in the three months ended
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