Lifetime Brands, Inc. Reports First Quarter 2019 Financial Results

GARDEN CITY, N.Y., May 09, 2019 (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 first quarter March 31, 2019.

Consolidated net sales were $149.9 million in the quarter ended March 31, 2019, an increase of $31.7 million, or 26.8%, as compared to consolidated net sales of $118.2 million, for the corresponding period in 2018. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased $33.2 million, or 28.5%, as compared to consolidated net sales in the corresponding period in 2018.

Gross margin was $54.3 million, or 36.2%, as compared to $45.1 million, or 38.2%, for the corresponding period in 2018.

Loss from operations was $2.3 million, as compared to a loss from operations of $13.3 million for the corresponding period in 2018.

Net loss was $4.9 million, or $0.24 per diluted share, as compared to a net loss of $11.6 million, or $0.70 per diluted share, in the corresponding period in 2018.

Adjusted net loss was $4.0 million, or $0.19 per diluted share, in the quarter ended March 31, 2019, as compared to adjusted net loss of $8.3 million, or $0.50 per diluted share, in the corresponding period in 2018.

Consolidated adjusted EBITDA was $6.1 million in the quarter ended March 31, 2019, as compared to consolidated adjusted EBITDA of ($0.5) million in the corresponding period in 2018.  Consolidated adjusted EBITDA was $69.7 million for the twelve months ended March 31, 2019, reflecting among other adjustments, projected synergies from the acquisition of Filament as permitted under our debt agreements. 

Robert Kay, Lifetime's Chief Executive Officer, commented, “I am pleased with our performance in the first quarter of 2019, which was driven by focused execution, strong end market demand and market share gains. With the close of the Filament acquisition in March 2018, we relaunched Lifetime Brands and, over the course of 2018, built a solid foundation for profitable growth. These efforts are beginning to bear fruit, as evidenced by our $6.6 million in consolidated adjusted EBITDA growth.”

Mr. Kay continued, “Importantly, we are seeing results from recently implemented strategic initiatives. Our restructured e-commerce operations now represent nearly 14 percent of revenues and pure-play e-commerce revenues grew nearly 30 percent compared to the first quarter of 2018. The reorganization of our European operations also led to meaningful year-over-year improvement. We remain focused on executing our strategic priorities to continue to deliver growth in 2019.”

Outlook

For the full fiscal year ending, December 31, 2019, the Company is providing the following financial outlook: 

Net sales	$750 to $755 million
Income from operations	$38 to 40 million
Net income	$13 to $14 million
Weighted-average diluted shares	21 million
Diluted income per common share	$0.62 to $0.67 per share
Adjusted net income	$15 to 16 million
Adjusted diluted income per common share	$0.71 to $0.76 per share
Consolidated adjusted EBITDA	$71 to $73 million

Outlook is based on a forecasted GBP to USD exchange rate of $1.30.  Net income, adjusted net income, diluted income per common share and adjusted diluted income per common share was calculated based on an expected effective tax rate of 28%. 

Conference Call

The Company has scheduled a conference call for Thursday, May 9, 2019 at 11:00 a.m. The dial-in number for the conference call is (866) 610-1072 or (973) 935-2840, passcode #3578067. A live webcast of the conference call will be accessible through https://event.on24.com/wcc/r/2000137-1/C6BA0A7FCC626F000AECC61B1891B8E1.  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 income (loss), adjusted diluted income 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 a 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 financial 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 by investors and analysts. Management uses these non-GAAP financial measurers as indicators of business performance.  These non-GAAP financial 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. Such statements include all statements regarding the growth of the Company, our financial outlook, our current and projected financial and operating performance, results, and profitability and all guidance related thereto, as well as our future plans and intentions regarding the Company and its consolidated subsidiaries. Such statements represent the Company’s current judgments, estimates, and assumptions about possible future events. The Company believes these judgments, estimates, and assumptions are reasonable, but these statements are not guarantees of any events or financial or operational 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; the possibility of impairments to the Company’s goodwill; changes in U.S. or foreign trade or tax law and policy; the impact of tariffs on imported goods and materials; 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; customer ordering behavior; the performance of our newer products; expenses and other challenges relating to the integration of the Filament Brands business and future acquisitions; changes in demand for the Company’s products; changes in the Company’s management team; the significant influence of the Company’s largest stockholder; fluctuations in foreign exchange rates; changes in U.S. trade policy or the trade policies of nations in which we or our suppliers do business; uncertainty regarding the U.K.’s exit from the European Union (Brexit); shortages of and price volatility for certain commodities; and 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 ability to maintain an appropriate level of debt. The Company undertakes no obligation to update these forward-looking statements other than as required by law.

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®, Chef'n® Chicago™ Metallic, Copco®, Fred® & Friends, Houdini™, KitchenCraft®, Kamenstein®, Kizmos™, La Cafetière®, MasterClass®, Misto®, Mossy Oak®, Swing-A-Way®, Taylor® Kitchen, Rabbit®  and Vasconia®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Fitz and Floyd®, 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 BUILT NY®, Taylor® Bath, Taylor® Weather and PlanetBox®. 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.                                                                       
Laurence Winoker, Chief Financial Officer                         
516-203-3590                                                                         
investor.relations@lifetimebrands.com        

or
Joele Frank, Wilkinson Brimmer Katcher
Ed Trissel / Andrew Squire / Sophie Throsby 
212-355-4449

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands - except per share data)
(unaudited)

		Three Months Ended
		March 31,
		2019		2018
Net sales		$  149,926		$  118,169
Cost of sales		95,605		73,082
Gross margin		54,321		45,087
Distribution expenses		15,860		17,822
Selling, general and administrative expenses		40,140		40,175
Restructuring expenses		608		406
Loss from operations		(2,287)		(13,316)
Interest expense		(4,922)		(2,103)
Loss on early retirement of debt		-		(66)
Loss before income taxes and equity in earnings		(7,209)		(15,485)
Income tax benefit		2,458		3,810
Equity in (losses) earnings, net of taxes		(116)		77
NET LOSS		$  (4,867)		$  (11,598)
Weighted-average shares outstanding – basic and diluted		20,510		16,601
BASIC LOSS PER COMMON SHARE		$  (0.24)		$  (0.70)
Weighted-average shares outstanding – basic and diluted		20,510		16,601
DILUTED LOSS PER COMMON SHARE		$  (0.24)		$  (0.70)

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands - except share data)

				March 31,		December 31,
				2019		2018
				(unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$  6,143		$  7,647
	Accounts receivable, less allowances of $7,264 at March 31, 2019 and $7,855 at December 31, 2018			92,727		125,292
	Inventory			187,278		173,601
	Prepaid expenses and other current assets			10,897		10,822
	Income taxes receivable			3,992		1,442
		TOTAL CURRENT ASSETS		301,037		318,804
PROPERTY AND EQUIPMENT, net				26,069		25,762
OPERATING LEASE RIGHT-OF-USE ASSETS				91,837		-
INVESTMENTS				22,185		22,582
INTANGIBLE ASSETS, net				336,434		338,847
DEFERRED INCOME TAXES				438		733
OTHER ASSETS				2,390		1,844
			TOTAL ASSETS	$  780,390		$  708,572
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Current maturity of term loan			$  10,757		$  1,253
	Accounts payable			32,016		38,167
	Accrued expenses			48,597		45,456
	Current portion of operating lease liability			10,257		-
		TOTAL CURRENT LIABILITIES		101,627		84,876
DEFERRED RENT & OTHER LONG-TERM LIABILITIES				10,071		23,339
DEFERRED INCOME TAXES				15,245		15,141
OPERATING LEASE LIABILITIES				96,818		-
INCOME TAXES PAYABLE, LONG-TERM				949		949
REVOLVING CREDIT FACILITY				26,490		42,080
TERM LOAN				252,879		262,694
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 March 31, 2019 and December 31, 2018; shares issued and outstanding: 20,927,517 at March 31, 2019 and 20,764,143 at December 31, 2018			209		208
	Paid-in capital			259,304		258,637
	Retained earnings			49,499		55,264
	Accumulated other comprehensive loss			(32,701)		(34,616)
		TOTAL STOCKHOLDERS’ EQUITY		276,311		279,493
			TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$  780,390		$  708,572

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

				Three Months Ended
				March 31,
				2019		2018
OPERATING ACTIVITIES
	Net loss			$  (4,867)		$  (11,598)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization		6,359		4,309
		Amortization of financing costs		438		220
		Deferred rent		-		370
		Non cash lease expense		544		-
		Stock compensation expense		907		838
		Undistributed equity in losses (earnings), net of taxes		116		(77)
		Loss on early retirement of debt		-		66
	Changes in operating assets and liabilities (excluding the effects of business acquisitions)
		Accounts receivable		33,097		48,119
		Inventory		(13,314)		(17,303)
		Prepaid expenses, other current assets and other assets		214		(1,476)
		Accounts payable, accrued expenses and other liabilities		(3,475)		(7,050)
		Income taxes receivable		(2,550)		-
		Income taxes payable		-		(3,880)
			NET CASH PROVIDED BY OPERATING ACTIVITIES	17,469		12,538
INVESTING ACTIVITIES
	Purchases of property and equipment			(1,393)		(2,408)
	Filament acquisition, net of cash acquired			-		(217,932)
			NET CASH USED IN INVESTING ACTIVITIES	(1,393)		(220,340)
FINANCING ACTIVITIES
	Proceeds from revolving credit facility			66,325		73,725
	Repayments of revolving credit facility			(82,130)		(123,938)
	Proceeds from term loan			-		275,000
	Repayment of term loan			(688)		-
	Proceeds from short term loan			-		79
	Payment of financing costs			-		(11,049)
	Payment of equity issuance costs			-		(929)
	Payments for capital leases			(6)		(24)
	Payments of tax withholding for stock based compensation			(232)		(258)
	Cash dividends paid			(906)		(652)
			NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(17,637)		211,954
Effect of foreign exchange on cash				57		152
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(1,504)		4,304
Cash and cash equivalents at beginning of period				7,647		7,600
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$  6,143		$  11,904

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)

Reconciliation of GAAP to Non-GAAP Operating Results

Consolidated adjusted EBITDA for the twelve months ended March 31, 2019:

				Three Months Ended								Twelve Months Ended
				June 30, 2018		September 30, 2018		December 31, 2018		March 31, 2019		March 31, 2019
				(in thousands)
Net income (loss) as reported				$  (6,057)		$  5,948		$  9,987		$  (4,867)		$  5,011
	Subtract out:
		Undistributed equity (earnings) losses, net		(155)		(185)		(128)		116		(352)
	Add back:
		Income tax provision (benefit)		(1,765)		906		7,558		(2,458)		4,241
		Interest expense		4,676		5,634		5,591		4,922		20,823
		Depreciation and amortization		6,422		6,076		6,522		6,359		25,379
		Impairment of goodwill		-		2,205		-		-		2,205
		Stock compensation expense		921		1,268		1,108		907		4,204
		Contingent consideration fair value adjustment		-		-		(1,774)		-		(1,774)
		Unrealized gain on foreign currency contracts		(2,112)		(190)		(33)		-		(2,335)
		Other permitted non-cash charges		916		307		-		-		1,223
		Acquisition related expenses		391		43		523		151		1,108
		Restructuring expenses		395		552		971		608		2,526
		Integration charges		110		103		433		174		820
		Warehouse relocation		168		55		118		215		556
		Projected synergies		-		-		-		-		6,063
Consolidated adjusted EBITDA				$  3,910		$  22,722		$  30,876		$  6,127		$  69,698

Consolidated adjusted EBITDA is a non-GAAP financial measure which is defined in the Company’s debt agreements. Consolidated adjusted EBITDA is defined as net income (loss), adjusted to exclude undistributed equity in (earnings) losses, income tax provision (benefit), interest expense, depreciation and amortization, impairment of goodwill, stock compensation expense, unrealized gain on foreign currency contracts and certain non-cash charges such as fair value adjustment on contingent consideration and purchase accounting adjustment to step-up the fair value of acquired inventory.  Pursuant to the Company’s Debt Agreements, consolidated adjusted EBITDA also includes adjustments, for the acquisition of Filament, restructuring expenses, integration charges, warehouse relocation expenses and cost saving synergies projected by the Company as a result of actions taken through March 31, 2019 or expected to be taken as of March 31, 2019, net of the benefits realized.

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands- except per share data)

Reconciliation of GAAP to Non-GAAP Operating Results (continued)

Adjusted net loss and adjusted diluted loss per common share:

				Three Months Ended March 31,
				2019		2018
				(in thousands)
Net loss as reported				$  (4,867)		$  (11,598)
	Adjustments:
		Acquisition related expenses		151		809
		Restructuring expenses		608		406
		Integration charges		174		35
		Warehouse relocation		215		2,384
		Loss on early retirement of debt		-		66
		Other permitted non-cash charges		-		287
		Unrealized loss on foreign currency contracts		-		393
		Deferred tax for foreign currency translation for Grupo Vasconia		-		(195)
		Income tax effect on adjustments		(273)		(872)
Adjusted net loss				$  (3,992)		$  (8,285)
Adjusted diluted loss per common share				$  (0.19)		$  (0.50)

Adjusted net loss and adjusted diluted loss per common share in the three months ended March 31, 2019 excludes acquisition related expenses, restructuring expenses, integration charges, and warehouse relocation costs. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.  Adjusted net loss and adjusted diluted loss per common share in the three months ended March 31, 2018 excludes acquisition related expenses, restructuring expenses, integration charges, warehouse relocation expenses, loss on early retirement of debt, non-cash purchase accounting charges, the unrealized loss on foreign currency contracts and the deferred tax for foreign currency translation for Grupo Vasconia.  The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.

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
		March 31,						March 31,								Increase (Decrease)
	Net sales	2019		2018		Increase (Decrease)		2019		2018		Increase (Decrease)		Currency Impact		Excluding Currency		Including Currency		Currency Impact
	U.S.	$  127,038		$  95,907		$  31,131		$  127,038		$  95,893		$  31,145		14		32.5%		32.5%		0.0%
	International	22,888		22,262		626		22,888		20,817		2,071		1,445		9.9%		2.8%		7.1%
	Total net sales	$  149,926		$  118,169		$  31,757		$  149,926		$  116,710		$  33,216		$  1,459		28.5%		26.9%		1.6%

1. "Constant Currency" is determined by applying the 2019 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 is intended to exclude the impact of foreign currency exchange rates.

Adjusted net income and adjusted diluted income per share outlook for the full fiscal year ending December 31, 2019:

Net income outlook		$13 to $14
Adjustments:
	Acquisition related expenses	0.2
	Restructuring, warehouse relocation, and integration expenses	3.0
	Income tax effect on adjustments	(0.9)
Adjusted net income outlook		$15 to $16
Adjusted diluted income per common share outlook		$0.71 to $0.76

Consolidated adjusted EBITDA outlook for the full fiscal year ending December 31, 2019:

Net income outlook			$13 to $14
	Subtract out:
		Undistributed equity in earnings	(0.8)
	Add back:
		Income tax expense	4.6 to 5.1
		Interest expense	22.0
		Depreciation and amortization	25.1
		Stock compensation expense	4.6
		Restructuring, warehouse relocation and integration expenses	3.0
	Consolidated adjusted EBITDA outlook		$71 to $73

Source: Lifetime Brands, Inc.