Lifetime Brands Reports Third Quarter Earnings of $0.52
GARDEN CITY, N.Y., Nov 04, 2010 (BUSINESS WIRE) -- Lifetime Brands, Inc. (NasdaqGS: LCUT), North America's leading resource for nationally branded kitchenware, tabletop and home décor products, today reported its financial results for the three and nine month periods ended September 30, 2010.
For the three months ended September 30, 2010, consolidated net sales were $124.9 million, an increase of 12% compared to consolidated net sales of $111.4 million in the corresponding period in 2009. Consolidated net income grew by 35% to $6.6 million and diluted income per common share increased by 30% to $0.52, as compared to $4.9 million and $0.40, respectively, in 2009. Basic income per common share was $0.55, as compared to $0.41 in 2009, an increase of 34%.
For the nine months ended September 30, 2010, consolidated net sales were $300.5 million, an increase of 5% compared to consolidated net sales of $287.0 million in the corresponding period in 2009. Consolidated net income was $6.3 million, as compared to a loss of $2.3 million in 2009. Diluted income per common share was $0.51, as compared to a loss of $0.19 in 2009. Basic income per common share was $0.53, as compared to a loss of $0.19 in 2009.
Consolidated gross margin as a percentage of net sales for the three months ended September 30, 2010, decreased to 36.9% from 37.3% in the corresponding period in 2009. Wholesale gross margin remained relatively unchanged at 35.6%, as compared to 35.7% in 2009. Gross margin for the Direct-to-Consumer Segment decreased to 63.3% from 72.0%, largely the result of increased promotional activity and free shipping.
Distribution expense as a percentage of net sales for the quarter was 9.0% in the three months ended September 30, 2010, as compared to 9.2% in the corresponding period in 2009. The decrease is primarily attributable to improved labor efficiencies resulting from the closing of the Company's York, Pennsylvania distribution center, offset, in part, by costs associated with a warehouse management system upgrade at the Company's Fontana, California facility.
Consolidated EBITDA for the third quarter of 2010 was $13.5 million, as compared to $11.6 million in 2009. Consolidated EBITDA for the trailing twelve month period ended September 30, 2010, was $40.9 million, as compared to $20.6 million for the trailing twelve month period ended September 30, 2009. Consolidated EBITDA is a non-GAAP measure that the Company defines as net income (loss), adjusted to exclude undistributed earnings of Grupo Vasconia, interest, taxes, depreciation and amortization, restructuring expenses, stock compensation expense, and loss on early retirement of debt as shown in the table below.
Jeffrey Siegel, Chairman, President and Chief Executive Officer said, "Despite the overall economy having stabilized, the retail sector generally remains challenged by the ongoing high level of unemployment. Lifetime's strong financial performance for the three and nine month periods, therefore, was not the result of riding a wave of improved conditions. Rather, it was due to carefully executing the strategy we adopted in 2009 to increase our market share, to further reduce and control SG&A and distribution expenses and to restructure our balance sheet. One measure of our success is that, earlier this year, we were able to achieve a comprehensive refinancing of our bank debt and to repurchase approximately two-thirds of our outstanding convertible senior notes, well ahead of their 2011 maturity. We believe that a continued focus on the key elements of our strategy can result in further improvements in profitability in 2011 and beyond.
"In our Wholesale Segment, sales of new products that we had introduced earlier in the year enabled us to increase our presence at key retailers. As a result, net sales for the quarter increased by $12.5 million, or 12%, to $118.8 million.
"Based on our current order flow, we anticipate that net wholesale sales in the fourth quarter of 2010 to exceed those reported in the fourth quarter of 2009 by approximately 9% to 10%. If we achieve this level of sales, the Company's full year net wholesale sales would exceed those of the prior year by approximately 6%.
"Net sales for the Direct-to-Consumer Segment grew by $1.0 million, or 20%, to $6.1 million. The growth in this segment primarily reflects increased net sales from our Pfaltzgraff(R) and Mikasa(R) websites and the net sales from the Company's Lifetime Sterling(R) and Housewares Deals(TM) websites, which were launched, respectively, in the fourth quarter of 2009 and in the second quarter of 2010.
Third-Quarter 2010 Conference Call
Lifetime has scheduled a conference call for Thursday, November 4, 2010 at 11:00 a.m. ET to discuss its third-quarter 2010 results. The dial-in number for the call is 706-679-7464; the conference ID is #17810808. A live webcast of the call will be broadcast at the Company's web site, www.lifetimebrands.com.
A replay of the call will also be available through Thursday, November 11, 2010 and can be accessed by dialing 706-645-9291, conference ID #17810808. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.
Lifetime Brands Investor Day
Lifetime Brands will host an Investor Day for institutional investors and analysts at the company's headquarters in Garden City, Long Island on Wednesday, November 10, 2010. Senior management will conduct an in-depth discussion of the company's operations, goals and strategy and provide a tour of its Expo Center. Attendance at the event is by invitation only. For further information, contact Harriet Fried of Lippert/Heilshorn & Associates at 212-838-3777 (hfried@lhai.com).
Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. For purposes of Regulation G, 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. Pursuant to the requirements of Regulation G, 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 maintaining and evaluating the Company's on-going financial results and trends. Management uses this non-GAAP information as an indicator of business 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 agreement; the availability of funding under that credit agreement; 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.
Lifetime Brands, Inc.
Lifetime Brands is North America's leading resource for nationally branded kitchenware, tabletopand home décor products. The Company markets its products under many of the industry's best known brands, including Farberware(R), KitchenAid(R), Pfaltzgraff(R), Mikasa(R), Cuisinart(R), Calvin Klein(R), CasaModa(R), Design for Living(R), Gorham(R), Hoffritz(R), International(R) Silver, Kirk Stieff(R), Nautica(R), Pedrini(R), Roshco(R), Sabatier(R), Sasaki(R), Towle(R) Silversmiths, Tuttle(R), Wallace(R) and Vasconia(R). Lifetime's products are distributed through most major retailers in North America.
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LIFETIME BRANDS, INC. | |||||||||||||||||||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||
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(In thousands, except per share data) | |||||||||||||||||||||||||||
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(unaudited) | |||||||||||||||||||||||||||
| Three Months Ended
September 30, |
Nine Months Ended
September 30, | ||||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||
| Net sales | $ | 124,918 | $ | 111,422 | $ | 300,543 | $ | 286,970 | |||||||||||||||||||
| Cost of sales | 78,762 | 69,778 | 185,656 | 181,032 | |||||||||||||||||||||||
| Distribution expenses | 11,312 | 10,313 | 31,042 | 30,863 | |||||||||||||||||||||||
| Selling, general and administrative expenses | 24,615 | 23,061 | 68,567 | 68,583 | |||||||||||||||||||||||
| Restructuring expenses | -- | 671 | -- | 832 | |||||||||||||||||||||||
| Income from operations | 10,229 | 7,599 | 15,278 | 5,660 | |||||||||||||||||||||||
| Interest expense | (2,090 | ) | (3,294 | ) | (7,163 | ) | (9,061 | ) | |||||||||||||||||||
| Loss on early retirement of debt | -- | -- | (764 | ) | -- | ||||||||||||||||||||||
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Income (loss) before income taxes and equity in |
8,139 | 4,305 | 7,351 | (3,401 | ) | ||||||||||||||||||||||
| Income tax provision | (2,390 | ) | (153 | ) | (3,002 | ) | (569 | ) | |||||||||||||||||||
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Equity in earnings of Grupo Vasconia, S.A.B., net of |
836 | 727 | 1,984 | 1,637 | |||||||||||||||||||||||
| NET INCOME (LOSS) | $ | 6,585 | $ | 4,879 | $ | 6,333 | $ | (2,333 | ) | ||||||||||||||||||
| BASIC INCOME (LOSS) PER COMMON SHARE | $ | 0.55 | $ | 0.41 | $ | 0.53 | $ | (0.19 | ) | ||||||||||||||||||
| DILUTED INCOME (LOSS) PER COMMON SHARE | $ | 0.52 | $ | 0.40 | $ | 0.51 | $ | (0.19 | ) | ||||||||||||||||||
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LIFETIME BRANDS, INC. |
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Supplemental Information |
| (In thousands) |
Consolidated EBITDA - Cumulative Trailing Twelve Months
| Consolidated EBITDA for the three months ended: | |||||||||||||||||||||||||||||||
| September 30, 2010 | $ | 13,529 | |||||||||||||||||||||||||||||
| June 30, 2010 | 6,117 | ||||||||||||||||||||||||||||||
| March 31, 2010 | 5,728 | ||||||||||||||||||||||||||||||
| December 31, 2009 | 15,558 | ||||||||||||||||||||||||||||||
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Consolidated EBITDA - cumulative trailing twelve |
$ | 40,932 | |||||||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Operating Results
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
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September 30, |
June 30, |
March 31, |
December 31, | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) as reported | $ | 6,585 | $ | (981 | ) | $ | 729 | $ | 5,048 | ||||||||||||||||||||||||||||||||
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Less: Undistributed earnings of |
(836 | ) | (82 | ) | (670 | ) | (534 | ) | |||||||||||||||||||||||||||||||||
| Add: | |||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 2,390 | 573 | 39 | 1,311 | |||||||||||||||||||||||||||||||||||||
| Interest expense | 2,090 | 2,644 | 2,429 | 4,124 | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 2,518 | 2,458 | 2,542 | 3,214 | |||||||||||||||||||||||||||||||||||||
| Restructuring expenses | -- | -- | -- | 1,784 | |||||||||||||||||||||||||||||||||||||
| Stock compensation expense | 782 | 741 | 659 | 611 | |||||||||||||||||||||||||||||||||||||
| Loss on early retirement of debt | -- | 764 | -- | -- | |||||||||||||||||||||||||||||||||||||
| Consolidated EBITDA | $ | 13,529 | $ | 6,117 | $ | 5,728 | $ | 15,558 | |||||||||||||||||||||||||||||||||
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Three months ended | ||||||||||||||||
| Net income as reported | $ | 4,879 | ||||||||||||||
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Less: Undistributed earnings of Grupo |
(703 | ) | ||||||||||||||
| Add: | ||||||||||||||||
| Provision for income taxes | 153 | |||||||||||||||
| Interest expense | 3,294 | |||||||||||||||
| Depreciation and amortization | 2,770 | |||||||||||||||
| Restructuring expenses | 671 | |||||||||||||||
| Stock compensation expense | 547 | |||||||||||||||
| Consolidated EBITDA | $ | 11,611 | ||||||||||||||
SOURCE: Lifetime Brands, Inc.
Lifetime Brands, Inc.
Laurence Winoker, 516-203-3590
Chief Financial Officer
investor.relations@lifetimebrands.com
or
Lippert/Heilshorn & Assoc.
Harriet Fried, SVP, 212-838-3777
hfried@lhai.com