Lifetime Brands, Inc. Reports Fourth Quarter 2015 Financial Results
Fourth Quarter Financial Highlights:
-
Consolidated net sales were
$185.9 million in the quarter endedDecember 31, 2015 ; a decrease of$4.1 million , or 2%, as compared to consolidated net sales of$190.0 million for the corresponding period in 2014. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales decreased 1.2%, as compared to consolidated net sales in the corresponding period in 2014. -
Gross margin was
$69.0 million , or 37.1%, in the quarter endedDecember 31, 2015 as compared to$69.8 million , or 36.7%, for the corresponding period in 2014. -
Income from operations was
$17.6 million , as compared to$18.3 million in the prior year’s quarter. -
Net income was
$11.0 million , or$0.77 per diluted share, in the quarter endedDecember 31, 2015 , as compared to net income of$9.3 million , or$0.66 per diluted share, in the corresponding period in 2014. -
Adjusted net income was
$10.8 million , or$0.75 per diluted share, in the quarter endedDecember 31, 2015 , as compared to adjusted net income of$9.4 million , or$0.66 per diluted share, in the corresponding period in 2014. -
Consolidated EBITDA was
$23.9 million , equal to 12.9% of consolidated net sales, in the quarter endedDecember 31, 2015 , as compared to$20.9 million , or 11.0% of consolidated net sales, for the corresponding 2014 period. -
Equity in earnings, net of taxes, was
$0.7 million for the three months endedDecember 31, 2015 , as compared to equity in losses of$1.1 million for the three months endedDecember 31, 2014 .
Full Year Financial Highlights:
-
Consolidated net sales were
$587.7 million in the year endedDecember 31, 2015 ; an increase of$1.7 million , or 0.3%, as compared to consolidated net sales of$586.0 million for the corresponding period in 2014. In constant currency, consolidated net sales increased 2.3%. -
Gross margin was
$214.4 million , or 36.5%, in the year endedDecember 31, 2015 as compared to$212.9 million , or 36.3%, for the corresponding period in 2014. -
Income from operations was
$24.2 million , as compared to$21.4 million in the prior year. -
Net income was
$12.3 million , or$0.86 per diluted share, in the year endedDecember 31, 2015 , as compared to net income of$1.5 million , or$0.11 per diluted share, in the corresponding period in 2014. -
Adjusted net income was
$14.2 million , or$1.00 per diluted share, in the year endedDecember 31, 2015 , as compared to adjusted net income of$10.3 million , or$0.73 per diluted share, in the corresponding period in 2014. -
Consolidated EBITDA was
$44.9 million in the year endedDecember 31, 2015 , as compared to$42.5 million for the corresponding 2014 period. -
Equity in earnings, net of taxes, was
$0.6 million for the year endedDecember 31, 2015 , as compared to equity in losses, net of taxes, of$6.5 million . The 2014 period includes a charge of$6.0 million , net of tax, for the reduction in the fair value of the Company’s investment in GS Internacional S/A.
“In 2015, net sales in the Company’s U.S. wholesale segment grew by 3.9%. Sales of kitchenware, tableware and home solutions products all rose, with a particularly strong increase in our home décor product category, where we leveraged the Bombay® license for giftables. In kitchenware, we benefited from strong increases in cutlery and the expansion of our important Farberware® brand, which is increasingly accepted as ‘America’s Housewares Brand.’ Tableware sales also rose, reflecting good reception of several new programs for dinnerware and flatware.
“The strength in the Company’s U.S. operations was offset by currency
challenges in the
“With the assistance of a major international consulting firm, we recently began an in-depth review of Lifetime’s U.S. wholesale businesses to ensure that we have the right structure to grow and thrive in today’s complex business environment. The study -- which includes evaluations of our divisional organization structure, product pipeline and brand management, as well as SKU rationalization and SG&A spending -- will serve as a blueprint to right size Lifetime’s SG&A expense base, realign our operating structure and redirect our operating activities to increase our efficiency and effectiveness. When fully implemented, we believe our business will be in a stronger position to achieve future growth and improved profitability.
“So far this year, we have shown our line-up of new products for 2016 at
the Birmingham Spring Fair, at Ambiente in
“While we believe that our strong position with major retailers in the
U.S. and the
Dividend
On
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 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.
The Company’s corporate website is www.lifetimebrands.com.
LIFETIME BRANDS, INC. |
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Three Months Ended |
Year Ended |
|||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Net sales | $ | 185,880 | $ | 190,034 | $ | 587,670 | $ | 586,010 | ||||
Cost of sales | 116,865 | 120,260 | 373,284 | 373,129 | ||||||||
Gross margin | 69,015 | 69,774 | 214,386 | 212,881 | ||||||||
Distribution expenses | 15,437 | 16,134 | 54,815 | 54,202 | ||||||||
Selling, general and administrative expenses | 35,514 | 35,330 | 134,903 | 133,786 | ||||||||
Intangible asset impairment | - | - | - | 3,384 | ||||||||
Restructuring expenses | 437 | - | 437 | 125 | ||||||||
Income from operations | 17,627 | 18,310 | 24,231 | 21,384 | ||||||||
Interest expense | (1,402) | (1,658) | (5,746) | (6,418) | ||||||||
Financing expense | - | (758) | (154) | (758) | ||||||||
Loss on early retirement of debt | - | (27) | - | (346) | ||||||||
Income before income taxes and equity in earnings | 16,225 | 15,867 | 18,331 | 13,862 | ||||||||
Income tax provision | (5,962) | (5,473) | (6,627) | (5,825) | ||||||||
Equity in earnings (losses), net of taxes | 743 | (1,133) | 574 | (6,493) | ||||||||
NET INCOME | $ | 11,006 | $ | 9,261 | $ | 12,278 | $ | 1,544 | ||||
Weighted-average shares outstanding- basic | 13,929 | 13,695 | 13,850 | 13,519 | ||||||||
BASIC INCOME PER COMMON SHARE | $ | 0.79 | $ | 0.68 | $ | 0.89 | $ | 0.11 | ||||
Weighted-average shares outstanding- diluted | 14,336 | 14,115 | 14,266 | 13,974 | ||||||||
DILUTED INCOME PER COMMON SHARE | $ | 0.77 | $ | 0.66 | $ | 0.86 | $ | 0.11 | ||||
Cash dividends declared per common share | $ | 0.0425 | $ | 0.0375 | $ | 0.16 | $ | 0.15 | ||||
LIFETIME BRANDS, INC. |
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December 31, | ||||||
2015 |
2014 |
|||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 7,131 | $ | 5,068 | ||
Accounts receivable, less allowances of $5,300 at December 31, 2015
and $6,663 at
December 31, 2014 |
90,576 | 107,211 | ||||
Inventory | 136,890 | 137,924 | ||||
Prepaid expenses and other current assets | 8,783 | 7,914 | ||||
TOTAL CURRENT ASSETS | 243,380 | 258,117 | ||||
PROPERTY AND EQUIPMENT, net | 24,877 | 26,801 | ||||
INVESTMENTS | 24,973 | 28,155 | ||||
INTANGIBLE ASSETS, net | 96,593 | 103,597 | ||||
DEFERRED INCOME TAXES | 6,486 | - | ||||
OTHER ASSETS | 2,643 | 4,732 | ||||
TOTAL ASSETS | $ | 398,952 | $ | 421,402 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Current maturity of Credit Agreement Term Loan | $ | 20,000 | $ | 10,000 | ||
Short term loan | 252 | 765 | ||||
Accounts payable | 27,245 | 28,694 | ||||
Accrued expenses | 40,154 | 36,961 | ||||
Deferred income taxes | - | 2,293 | ||||
Income taxes payable | 4,064 | 5,156 | ||||
TOTAL CURRENT LIABILITIES | 91,715 | 83,869 | ||||
DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 18,556 | 20,160 | ||||
DEFERRED INCOME TAXES | 8,596 | 1,485 | ||||
REVOLVING CREDIT FACILITY | 65,617 | 92,655 | ||||
CREDIT AGREEMENT TERM LOAN | 15,000 | 35,000 | ||||
STOCKHOLDERS’ EQUITY | ||||||
Preferred stock, $.01 par value, shares authorized: 100 shares of
Series A and
|
- | - | ||||
Common stock, $.01 par value, shares authorized: 25,000,000;
shares issued and
|
140 | 137 | ||||
Paid-in capital | 165,780 | 160,315 | ||||
Retained earnings | 47,733 | 37,703 | ||||
Accumulated other comprehensive loss | (14,185) | (9,922) | ||||
TOTAL STOCKHOLDERS’ EQUITY | 199,468 | 188,233 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 398,952 | $ | 421,402 | ||
LIFETIME BRANDS, INC. |
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Year ended |
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2015 | 2014 | |||||
OPERATING ACTIVITIES | ||||||
Net income | $ | 12,278 | $ | 1,544 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Provision for doubtful accounts | 46 | 286 | ||||
Depreciation and amortization | 14,203 | 14,200 | ||||
Amortization of financing costs | 641 | 617 | ||||
Deferred rent | 848 | (722) | ||||
Deferred income taxes | (1,440) | (3,757) | ||||
Stock compensation expense | 5,286 | 4,493 | ||||
Undistributed equity (earnings) losses | (348) | 6,724 | ||||
Intangible asset impairment | - | 3,384 | ||||
Loss on early retirement of debt | - | 346 | ||||
Contingent consideration fair value adjustment | 650 | (4,203) | ||||
Changes in operating assets and liabilities (excluding the effects of business acquisitions) | ||||||
Accounts receivable | 15,481 | (6,209) | ||||
Inventory | (308) | (6,354) | ||||
Prepaid expenses, other current assets and other assets | 1,387 | (2,063) | ||||
Accounts payable, accrued expenses and other liabilities | (397) | (950) | ||||
Income taxes payable | (1,517) | (2,747) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 46,810 | 4,589 | ||||
INVESTING ACTIVITIES | ||||||
Purchases of property and equipment | (5,166) | (6,171) | ||||
Equity investments | 112 | (764) | ||||
Kitchen Craft acquisition, net of cash acquired | - | (59,977) | ||||
Other acquisition, net of cash acquired | - | (5,389) | ||||
Net proceeds from sale of property | 26 | 68 | ||||
NET CASH USED IN INVESTING ACTIVITIES | (5,028) | (72,233) | ||||
FINANCING ACTIVITIES | ||||||
Proceeds from Revolving Credit Facility | 263,632 | 278,014 | ||||
Repayments of Revolving Credit Facility | (290,346) | (234,067) | ||||
Repayments of Senior Secured Term Loan | - | (20,625) | ||||
Proceeds from Credit Agreement Term Loan | - | 50,000 | ||||
Repayments of Credit Agreement Term Loan | (10,000) | (5,000) | ||||
Proceeds from Short Term Loan | 289 | 1,645 | ||||
Repayments of Short Term Loan | (802) | (880) | ||||
Payment of financing costs | (212) | (2,283) | ||||
Cash dividends paid | (2,150) | (2,031) | ||||
Payment of capital lease obligations | (50) | - | ||||
Payment of contingent consideration | (391) | - | ||||
Proceeds from the exercise of stock options | 843 | 2,488 | ||||
Excess tax benefits from stock options, net | 43 | 553 | ||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
(39,144) | 67,814 | ||||
Effect of foreign exchange on cash | (575) | (49) | ||||
INCREASE IN CASH AND CASH EQUIVALENTS | 2,063 | 121 | ||||
Cash and cash equivalents at beginning of year | 5,068 | 4,947 | ||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 7,131 | $ | 5,068 | ||
LIFETIME BRANDS, INC. |
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Reconciliation of GAAP to Non-GAAP Operating Results |
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Consolidated EBITDA: |
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Three Months Ended |
Year Ended |
|||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
(in thousands) | ||||||||||||
Net income as reported | $ | 11,006 | $ | 9,261 | $ | 12,278 | $ | 1,544 | ||||
Subtract out: | ||||||||||||
Undistributed equity (earnings) losses, net | (517) | 1,364 | (348) | 6,724 | ||||||||
Add back: | ||||||||||||
Income tax provision | 5,962 | 5,473 | 6,627 | 5,825 | ||||||||
Interest expense | 1,402 | 1,658 | 5,746 | 6,418 | ||||||||
Financing expense | - | 758 | 154 | 758 | ||||||||
Depreciation and amortization | 3,500 | 3,572 | 14,203 | 14,200 | ||||||||
Stock compensation expense | 2,972 | 2,360 | 5,286 | 4,493 | ||||||||
Loss on early retirement of debt | - | 27 | - | 346 | ||||||||
Intangible asset impairment | - | - | - | 3,384 | ||||||||
Contingent consideration | (876) | (4,115) | 816 | (3,450) | ||||||||
Restructuring expenses | 437 | - | 437 | 125 | ||||||||
Permitted acquisition related expenses | 3 | 560 | (314) | 2,175 | ||||||||
Consolidated EBITDA | $ | 23,889 | $ | 20,918 | $ | 44,885 | $ | 42,542 | ||||
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, 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) |
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Reconciliation of GAAP to Non-GAAP Operating Results (continued) |
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Adjusted net income and adjusted diluted income per common share: |
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Three Months Ended |
Year Ended |
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2015 | 2014 | 2015 | 2014 | |||||||||
(in thousands) | ||||||||||||
Net income as reported | $ | 11,006 | $ | 9,261 | $ | 12,278 | $ | 1,544 | ||||
Adjustments: | ||||||||||||
Contingent consideration | (724) | (4,203) | 821 | (4,203) | ||||||||
Impairment of GS Internacional S/A | - | 764 | - | 6,012 | ||||||||
Intangible asset impairment | - | - | - | 3,384 | ||||||||
Loss on early retirement of debt | - | 27 | - | 346 | ||||||||
Acquisition related expenses (recoveries), net | 3 | 574 | (382) | 2,176 | ||||||||
Financing expenses | - | 758 | 154 | 758 | ||||||||
Restructuring expenses | 437 | - | 437 | 125 | ||||||||
Deferred tax for foreign currency translation for Grupo Vasconia | (28) | 1,063 | 1,303 | 1,063 | ||||||||
Income tax effect on adjustments | 114 | 1,135 | (412) | (942) | ||||||||
Adjusted net income | $ | 10,808 | $ | 9,379 | $ | 14,199 | $ | 10,263 | ||||
Adjusted diluted income per common share | $ | 0.75 | $ | 0.66 | $ | 1.00 | $ | 0.73 | ||||
Adjusted net income in the three months and year ended
LIFETIME BRANDS, INC. Supplemental Information (In thousands- except per share data) |
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Reconciliation of GAAP to Non-GAAP Operating Results (continued) |
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Constant Currency: |
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As Reported | Constant Currency (1) | |||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Year-Over-Year | ||||||||||||||||||||||||||||
December 31, | December 31, | Increase (Decrease) | ||||||||||||||||||||||||||||
Net sales | 2015 | 2014 |
Increase |
2015 | 2014 |
Increase |
Currency |
Excluding |
Including |
Currency |
||||||||||||||||||||
U.S. Wholesale | $ | 146,883 | $ | 145,138 | $ | 1,745 | $ | 146,883 | $ | 144,929 | $ | 1,954 | $ | (209) | 1.3 | % | 1.2 | % | (0.1) | % | ||||||||||
International | 31,359 | 37,261 | (5,902) | 31,359 | 35,667 | (4,308) | (1,594) | (12.1) | % | (15.8) | % | (3.8) | % | |||||||||||||||||
Retail Direct | 7,638 | 7,635 | 3 | 7,638 | 7,635 | 3 | - | 0.0 | % | 0.0 | % | - | % | |||||||||||||||||
Total net sales | $ | 185,880 | $ | 190,034 | $ | (4,154) | $ | 185,880 | $ | 188,231 | $ | (2,351) | $ | (1,803) | (1.2) | % | (2.2) | % | (0.9) | % | ||||||||||
As Reported | Constant Currency (1) | |||||||||||||||||||||||||||||
Year Ended | Year Ended | Year-Over-Year | ||||||||||||||||||||||||||||
December 31, | December 31, | Increase (Decrease) | ||||||||||||||||||||||||||||
Net sales | 2015 | 2014 |
Increase |
2015 | 2014 |
Increase |
Currency |
Excluding |
Including |
Currency |
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U.S. Wholesale | $ | 458,593 | $ | 441,293 | $ | 17,300 | $ | 458,593 | $ | 440,839 | $ | 17,754 | $ | (454) | 4.0 | % | 3.9 | % | (0.1) | % | ||||||||||
International | 108,000 | 125,230 | (17,230) | 108,000 | 114,373 | (6,373) | (10,857) | (5.6) | % | (13.8) | % | (8.2) | % | |||||||||||||||||
Retail Direct | 21,077 | 19,487 | 1,590 | 21,077 | 19,487 | 1,590 | - | 8.2 | % | 8.2 | % | - | % | |||||||||||||||||
Total net sales | $ | 587,670 | $ | 586,010 | $ | 1,660 | $ | 587,670 | $ | 574,699 | $ | 12,971 | $ | (11,311) | 2.3 | % | 0.3 | % | (2.0) | % | ||||||||||
(1) "Constant Currency" is determined by applying the 2015 average exchange rates to the prior year local currency net 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 net sales growth excludes the impact of currency.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160311005125/en/
Source:
Lifetime Brands, Inc.
Laurence Winoker, 516-203-3590
Chief
Financial Officer
investor.relations@lifetimebrands.com
or
LHA
Harriet
Fried, 212-838-3777
SVP
hfried@lhai.com