Lifetime Brands, Inc. Reports Fourth Quarter 2016 Financial Results

Company Reports Record Fourth Quarter Revenues and Income from Operations

Declares Regular Quarterly Dividend

GARDEN CITY, N.Y., March 13, 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 fourth quarter and year ended December 31, 2016.

Fourth Quarter Financial Highlights:

Consolidated net sales were $193.5 million in the quarter ended December 31, 2016; an increase of $7.6 million, or 4.1%, as compared to consolidated net sales of $185.9 million for the corresponding period in 2015. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased $13.0 million, or 7.2%, as compared to consolidated net sales in the corresponding period in 2015.

Gross margin was $75.0 million, or 38.8%, as compared to $69.0 million, or 37.1%, for the corresponding period in 2015.

Income from operations was $21.8 million, as compared to $17.6 million in the prior year’s quarter.

Net income was $14.7 million, or $1.00 per diluted share, in the quarter ended December 31, 2016, as compared to net income of $11.0 million, or $0.77 per diluted share, in the corresponding period in 2015.

Adjusted net income was $15.2 million, or $1.03 per diluted share, in the quarter ended December 31, 2016, as compared to adjusted net income of $10.8 million, or $0.75 per diluted share, in the corresponding period in 2015. 

Consolidated adjusted EBITDA was $25.1 million, equal to 13.0% of consolidated net sales, in the quarter ended December 31, 2016, as compared to $23.9 million, or 12.9% of consolidated net sales, for the corresponding 2015 period.

Equity in earnings, net of taxes, was $1.0 million for the three months ended December 31, 2016, as compared to equity in earnings, net of tax, of $743 thousand for the three months ended December 31, 2015. 

Full Year Financial Highlights:

Consolidated net sales were $592.6 million in the year ended December 31, 2016; an increase of $4.9 million, or 0.8%, as compared to consolidated net sales of $587.7 million for the corresponding period in 2015. In constant currency, consolidated net sales increased $17.4 million, or 3.0%.

Gross margin was $216.9 million, or 36.6%, in the year ended December 31, 2016 as compared to $214.4 million, or 36.5%, for the corresponding period in 2015.

Income from operations was $27.1 million, as compared to $24.2 million in the prior year.

Net income was $15.7 million, or $1.08 per diluted share, in the year ended December 31, 2016, as compared to net income of $12.3 million, or $0.86 per diluted share, in the corresponding period in 2015.

Adjusted net income was $19.2 million, or $1.32 per diluted share, in the year ended December 31, 2016, as compared to adjusted net income of $14.2 million, or $1.00 per diluted share, in the corresponding period in 2015. 

Consolidated adjusted EBITDA was $47.2 million in the year ended December 31, 2016, as compared to $44.9 million for the corresponding 2015 period.

Equity in earnings, net of taxes, was $748 thousand for the year ended December 31, 2016, as compared to equity in earnings, net of taxes, of $574 thousand for the corresponding 2015 period.

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

“Lifetime finished 2016 on a very strong note, reporting record revenues and income from operations. For the quarter, excluding the impact of foreign currency fluctuations, consolidated net sales rose 7.2% on an actual basis and 3.4% on an organic basis. The Wilton Armetale®, Amco Houseworks®, Chicago™ Metallic, Swing-A-Way® and Copco® brands that we acquired in 2016 all were accretive and contributed to our exceptional performance.

“Our strong fourth-quarter results reflect excellent progress in Lifetime’s journey to simplify and strengthen our organization for growth regardless of the economic environment. We also made notable progress in building our e-commerce presence as we benefited from investments we made in recent years to capitalize on ongoing shifts in consumer shopping. In addition, our strategic initiatives to enhance our Tableware and Home Solutions offerings, as well as to continue building Lifetime’s leading position in Kitchenware, contributed to our strong showing. Our international segment, now known as Lifetime Brands Europe, performed well in spite of strong headwinds from both the economy and exchange rates.

“As we move through 2017, we are confident in Lifetime’s ability to grow and thrive in today’s complex business environment.  We are also as committed as ever to delivering five-star experiences to consumers through innovative products, services and solutions for the home. We expect low-to mid-single digit overall organic sales growth in 2017, and expect to reap even further benefits from Lifetime Next, our drive to enhance our company’s operations.”

Dividend                                                                                                

On Wednesday, March 8, 2017, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on May 15, 2017 to shareholders of record on May 1, 2017.

Conference Call

The Company has scheduled a conference call for Monday, March 13, 2017 at 11:00 a.m. ET. The dial-in number for the conference call is (844) 787-0801 or (661) 378-9632, passcode #62208978. A live webcast of the conference call will be accessible through http://edge.media-server.com/m/p/6a7s28k4/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. 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 foreign exchange fluctuations; 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®, Misto®, Mossy Oak®, Reo®, Savora™, 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®, Debbie Meyer® and Design for Living™. 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.	LHA
Laurence Winoker, Chief Financial Officer	Harriet Fried, SVP
516-203-3590	212-838-3777
investor.relations@lifetimebrands.com	hfried@lhai.com

 

LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands - except per share data)
		Three Months Ended December 31,								Year Ended December 31,
			2016				2015				2016				2015
Net sales		$	193,520			$	185,880			$	592,619			$	587,670
Cost of sales			118,487				116,865				375,719				373,284
Gross margin			75,033				69,015				216,900				214,386
Distribution expenses			16,781				15,437				57,006				54,815
Selling, general and administrative expenses			35,735				35,514				130,397				134,903
Restructuring expenses			719				437				2,420				437
Income from operations			21,798				17,627				27,077				24,231
Interest expense			(1,257	)			(1,402	)			(4,803	)			(5,746	)
Financing expense			-				-				-				(154	)
Loss on early retirement of debt			-				-				(272	)			-
Income before income taxes and equity in earnings			20,541				16,225				22,002				18,331
Income tax provision			(6,812	)			(5,962	)			(7,030	)			(6,627	)
Equity in earnings, net of taxes			1,018				743				748				574
NET INCOME		$	14,747			$	11,006			$	15,720			$	12,278
Weighted-average shares outstanding- basic			14,310				13,929				14,174				13,850
BASIC INCOME PER COMMON SHARE		$	1.03			$	0.79			$	1.11			$	0.89
Weighted-average shares outstanding- diluted			14,712				14,336				14,549				14,266
DILUTED INCOME PER COMMON SHARE		$	1.00			$	0.77			$	1.08			$	0.86
Cash dividends declared per common share		$	0.0425			$	0.0425			$	0.17			$	0.16

 

LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands - except share data)
				December 31,
					2016				2015
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	7,883			$	7,131
	Accounts receivable, less allowances of $5,725 at December 31, 2016 and $5,300 at   December 31, 2015				104,556				90,576
	Inventory				135,212				136,890
	Prepaid expenses and other current assets				8,796				8,783
		TOTAL CURRENT ASSETS			256,447				243,380
PROPERTY AND EQUIPMENT, net					21,131				24,877
INVESTMENTS					22,712				24,973
INTANGIBLE ASSETS, net					89,219				96,593
DEFERRED INCOME TAXES					8,459				6,486
OTHER ASSETS					1,886				2,022
			TOTAL ASSETS	$	399,854			$	398,331
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
	Current maturity of Credit Agreement Term Loan			$	9,343			$	19,646
	Short term loan				113				252
	Accounts payable				29,698				27,245
	Accrued expenses				45,212				40,154
	Income taxes payable				6,920				4,064
		TOTAL CURRENT LIABILITIES			91,286				91,361
DEFERRED RENT & OTHER LONG-TERM LIABILITIES					18,973				18,556
DEFERRED INCOME TAXES					5,666				8,596
REVOLVING CREDIT FACILITY					86,201				65,617
CREDIT AGREEMENT TERM LOAN					-				14,733
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 December 31, 2016    and 25,000,000 at December 31, 2015; shares issued and outstanding: 14,555,936 at   December 31, 2016 and 14,030,221 at December 31, 2015				146				140
	Paid-in capital				173,600				165,780
	Retained earnings				60,981				47,733
	Accumulated other comprehensive loss				(36,999	)			(14,185	)
		TOTAL STOCKHOLDERS’ EQUITY			197,728				199,468
			TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	399,854			$	398,331

 

LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
				Year ended December 31,
					2016				2015
OPERATING ACTIVITIES
	Net income			$	15,720			$	12,278
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			14,148				14,203
		Amortization of financing costs			650				641
		Deferred rent			(243	)			848
		Deferred income taxes			(1,951	)			(1,440	)
		Net loss on disposal of fixed assets			84				-
		Stock compensation expense			2,942				5,286
		Undistributed equity earnings			(544	)			(348	)
		Loss on early retirement of debt			272				-
		Contingent consideration fair value adjustment			-				650
	Changes in operating assets and liabilities (excluding the effects of business acquisitions)
		Accounts receivable			(17,977	)			15,527
		Inventory			4,491				(308	)
		Prepaid expenses, other current assets and other assets			(1,199	)			1,087
		Accounts payable, accrued expenses and other liabilities			12,255				(397	)
		Income taxes receivable			132				-
		Income taxes payable			969				(1,517	)
			NET CASH PROVIDED BY OPERATING ACTIVITIES		29,749				46,510
INVESTING ACTIVITIES
	Purchases of property and equipment				(3,380	)			(5,166	)
	Equity investments				567				112
	Acquisitions, net of cash acquired				(21,699	)			-
	Net proceeds from sale of property				64				26
			NET CASH USED IN INVESTING ACTIVITIES		(24,448	)			(5,028	)
FINANCING ACTIVITIES
	Proceeds from Revolving Credit Facility				268,242				263,632
	Repayments of Revolving Credit Facility				(246,756	)			(290,346	)
	Repayments of Credit Agreement Term Loan				(25,500	)			(10,000	)
	Proceeds from Short Term Loan				118				289
	Repayments of Short Term Loan				(248	)			(802	)
	Payments for stock repurchase				(86	)			-
	Payment of financing costs				(30	)			(212	)
	Cash dividends paid				(2,413	)			(2,150	)
	Payment of capital lease obligations				(68	)			(50	)
	Payment of contingent consideration				-				(391	)
	Proceeds from the exercise of stock options				2,353				843
	Excess tax benefits from stock options, net				223				43
			NET CASH  USED IN FINANCING ACTIVITIES		(4,165	)			(39,144	)
Effect of foreign exchange on cash					(384	)			(275	)
INCREASE IN CASH AND CASH EQUIVALENTS					752				2,063
Cash and cash equivalents at beginning of year					7,131				5,068
CASH AND CASH EQUIVALENTS AT END OF YEAR				$	7,883			$	7,131

 

 

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)
Reconciliation of GAAP to Non-GAAP Operating Results
Consolidated adjusted EBITDA:
				Three Months Ended December 31,								Year Ended December 31,
					2016				2015				2016				2015
				(in thousands)
Net income as reported				$	14,747			$	11,006			$	15,720			$	12,278
	Subtract out:
		Undistributed equity earnings, net			(814	)			(517	)			(544	)			(348	)
	Add back:
		Income tax provision			6,812				5,962				7,030				6,627
		Interest expense			1,257				1,402				4,803				5,746
		Financing expense			-				-				-				154
		Depreciation and amortization			2,404				3,500				14,148				14,203
		Stock compensation expense			827				2,972				2,942				5,286
		Loss on early retirement of debt			-				-				272				-
		Contingent consideration			-				(876	)			-				816
		Restructuring expenses			719				437				2,420				437
		Permitted acquisition related expenses,   net of recoveries and acquisition not    completed			(852	)			3				435				(314	)
Consolidated adjusted EBITDA				$	25,100			$	23,889			$	47,226			$	44,885

Consolidated adjusted EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity in earnings (losses), income taxes, interest, losses on early retirement of debt, depreciation and amortization, stock compensation expense, certain contingent consideration, certain acquisition related expenses and restructuring expenses, as shown in the tables above.

 

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands- except per share data)
Reconciliation of GAAP to Non-GAAP Operating Results (continued)
Adjusted net income and adjusted diluted income per share:
				Three Months Ended December 31,								Year Ended December 31,
					2016				2015				2016				2015
				(in thousands)
Net income as reported				$	14,747			$	11,006			$	15,720			$	12,278
	Adjustments:
		Restructuring expenses			719				437				2,420				437
		Acquisition related expenses (recoveries), net			65				3				1,352				(382	)
		Depreciation expense adjustment			(86	)			-				1,241				-
		Loss on early retirement of debt			-				-				272				-
		Contingent consideration			-				(724	)			-				821
		Financing expenses			-				-				-				154
		Gain on sale of GS International, net of tax			-				-				(189	)			-
		Deferred tax for foreign currency translation for Grupo  Vasconia			-				(28	)			517				1,303
		Income tax effect on adjustments			(279	)			114				(2,114	)			(412	)
Adjusted net income				$	15,166			$	10,808			$	19,219			$	14,199
Adjusted diluted income per common share				$	1.03			$	0.75			$	1.32			$	1.00

Adjusted net income in the three months and year ended December 31, 2016 excludes restructuring expenses, acquisition related expenses, a charge to correct the accumulated depreciation balance relating to certain leasehold improvements at one of the Company’s U.S. warehouses, loss on early retirement of debt, the gain on the sale of GS International 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. Adjusted net income in the three months and year ended December 31, 2015 excludes restructuring expenses, acquisition related expenses, the recovery of acquisition related expenses for an acquisition not completed, financing expenses, the fair value adjustment of certain contingent consideration 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.

 

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands- except per share data)
Reconciliation of GAAP to Non-GAAP Operating Results (continued)
Constant Currency:
	As Reported										Constant Currency (1)
	Three Months Ended										Three Months Ended														Year-Over-Year
	December 31,										December 31,														Increase (Decrease)
Net sales		2016			2015		Increase (Decrease)					2016			2015		Increase (Decrease)				Currency Impact				Excluding Currency				Including Currency				Currency Impact
U.S. Wholesale	$	156,368		$	146,883		$	9,485			$	156,368		$	146,889		$	9,479			$	6			6.5		%		6.5		%		-		%
International		29,101			31,359			(2,258	)			29,101			25,985			3,116				(5,374	)		12.0		%		(7.2	)	%		(19.2	)	%
Retail Direct		8,051			7,638			413				8,051			7,638			413				-			5.4		%		5.4		%		-		%
Total net sales	$	193,520		$	185,880		$	7,640			$	193,520		$	180,512		$	13,008			$	(5,368	)		7.2		%		4.1		%		(3.1	)	%
	As Reported										Constant Currency (1)
	Year Ended										Year Ended														Year-Over-Year
	December 31,										December 31,														Increase (Decrease)
Net sales		2016			2015		Increase (Decrease)					2016			2015		Increase (Decrease)				Currency Impact				Excluding Currency				Including Currency				Currency Impact
U.S. Wholesale	$	470,981		$	458,593		$	12,388			$	470,981		$	458,498		$	12,483			$	(95	)		2.7		%		2.7		%		-		%
International		101,070			108,000			(6,930	)			101,070			95,675			5,395				(12,325	)		5.6		%		(6.4	)	%		(12.1	)	%
Retail Direct		20,568			21,077			(509	)			20,568			21,077			(509	)			-			(2.4	)	%		(2.4	)	%		-		%
Total net sales	$	592,619		$	587,670		$	4,949			$	592,619		$	575,250		$	17,369			$	(12,420	)		3.0		%		0.8		%		(2.2	)	%
(1)"Constant Currency" is determined by applying the 2016 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.