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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.

 

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Lifetime Brands, Inc.