Lifetime Hoan Reports Third Quarter 2004 Results
WESTBURY, N.Y.--(BUSINESS WIRE)--Nov. 3, 2004--LIFETIME HOAN CORPORATION (NASDAQ NM: LCUT), a leading designer, marketer and distributor of housewares, today announced results for the third quarter and nine months ended September 30, 2004.
For the third quarter of 2004, net sales totaled $51.2 million compared to $44.1 million for the same period of the prior year. The Company reported net income of $2.6 million, or $0.23 per diluted share, compared to $2.9 million, or $0.27 per diluted share, for the third quarter of 2003.
Net sales for the nine months ended September 30, 2004 totaled $121.4 million compared to $98.3 million for the same period in 2003, an increase of 23.5%. Net income for the period was $3.1 million, or $0.28 per diluted share, compared to $3.0 million, or $0.28 per diluted share, last year.
Jeffrey Siegel, Chairman, President and Chief Executive Officer, commented, "Lifetime's net revenues for the third quarter increased by 16%. This significant increase notwithstanding, the results for the quarter did not meet our expectations.
"Sales did not attain our earlier forecast principally because of late delivery of merchandise from overseas. Some of our suppliers encountered difficulties with the start-up of production of new product lines. The affected product lines included our new lines of KitchenAid(R) cutlery, our new ceramic S'mores Maker(TM) and our new Smokeless Tabletop Griller(TM). In some cases, these products utilize new materials or combinations of materials that, coupled with our stringent quality requirements, resulted in unexpected problems for our suppliers. As a result, a number of sales programs did not begin as scheduled during the quarter. In addition, our supply chain faced a number of other challenges, including shortages and delays in the availability of raw materials in Asia and delays caused by congestion at ports in the United States. While these start-up and other supply chain issues had a negative impact on sales, we believe they have generally been resolved and we expect the flow of merchandise to continue at satisfactory levels through the important holiday shipping season."
Mr. Siegel continued, "Many of our retail customers also faced challenges during the quarter. These resulted from high gasoline prices and severe weather in the Southeastern United States. In addition, measures instituted earlier in 2004 by a major customer to improve inventory turns and lower its in-stock position continued. Together, these factors had a negative effect on the timing and reduced the size of orders we received during the quarter, when compared to our expectations.
"Our profitability in the quarter did not meet our target, principally as a result of lower than anticipated net sales. Our gross margin percentage fell by 1.6%, reflecting proportionally higher sales of products that traditionally carry lower gross profit margins. This was due to increased sales of products sold under the KitchenAid(R) brand, which generate a lower gross profit margin due to the added cost of royalties, as well as higher sales of bakeware, functional glassware and tabletop products.
"Selling, general and administrative (SG&A) expenses rose due to the increase in the share of space in our outlet stores for which Lifetime is responsible compared with same quarter last year, as well as added costs related to strengthening our product development, sourcing and sales/marketing infrastructure. We believe that our planned investments in these areas, which had a negative impact on our profitability during the quarter, are necessary to ensure our growth and will have a positive impact on future profitability. In addition, SG&A expenses increased as a result of the acquisitions of the business and assets of USE(R) - Tools for Civilization(R), Gemco Ware and Excel."
Mr. Siegel concluded, "As a result of the third-quarter developments, we have reviewed our forecast and refined our guidance for 2004. We are lowering our net sales guidance for the year to approximately $190 - $197 million from $202 - $212 million. Consequently, we are lowering our earnings per share estimate to approximately $0.78 - $0.87 from $0.95 - $1.10."
Lifetime Hoan noted that third-quarter 2004 sales attributable to the :USE(R) - Tools for Civilization(R), Gemco Ware and Excel businesses, which the Company acquired during the last twelve months, totaled $5.1 million.
Separately, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.0625 per share, payable on November 19, 2004 to shareholders of record on November 5, 2004.
Lifetime Hoan has scheduled a conference call Wednesday, November 3, at 11:00 a.m. Eastern time to discuss third-quarter-2004 results and additional matters. The dial-in number for the call is (706) 634-1218. A replay of the call will also be available through Wednesday, August 4, and can be accessed by dialing (706) 645-9291, conference ID #1541466. A live webcast of the call will be broadcast at the Company's web site, www.lifetime.hoan.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.
Lifetime is a leading designer, marketer and distributor of kitchenware, cutlery & cutting boards, bakeware & cookware, pantryware & spices, tabletop and bath accessories, marketing its products under various trade names including Farberware(R), KitchenAid(R), Cuisinart(R), Hoffritz(R), Sabatier(R), DBK-Daniel Boulud Kitchen(TM), Joseph Abboud Environments(R), Roshco(R), Baker's Advantage(R), Kamenstein(R), CasaModa(TM), Hoan(R), Gemco(R) and :USE(R). Lifetime's products are distributed through almost every major retailer in the United States.
The information herein contains certain forward-looking statements including statements concerning the Company's future prospects. These statements involve risks and uncertainties, including risks relating to general economic conditions and risks relating to the Company's operations, such as the risk of loss of major customers and risks relating to changes in demand for the Company's products, as detailed from time to time in the Company's filings with the Securities and Exchange Commission.
LIFETIME HOAN CORPORATION
INCOME STATEMENT
(in 000's, except per share data)
Three Months % Increase
Ended
September 30,
(Unaudited)
-----------------
2004 2003 (Decrease)
-------- -------- ----------
Net Sales $51,241 $44,068 16.3%
Cost of Sales 30,553 25,552 19.6%
Distribution Expenses 5,562 5,337 4.2%
SG&A 10,579 8,163 29.6%
-------- --------
Income from Operations 4,547 5,016 (9.4%)
Interest Expense 268 189 41.8%
Other Income (14) (16) (12.5%)
-------- --------
Income Before Taxes 4,293 4,843 (11.4%)
Tax Provision 1,709 1,956 (12.6%)
-------- --------
Net Income $2,584 $2,887 (10.5%)
======== ========
Diluted Earnings Per Share from Net
Income $0.23 $0.27
======== ========
Weighted Average Shares 11,281 10,784
Nine Months Ended % Increase
September 30,
(Unaudited)
------------------
2004 2003 (Decrease)
--------- -------- ----------
Net Sales $121,399 $98,302 23.5%
Cost of Sales 71,396 55,982 27.5%
Distribution Expenses 15,007 14,103 6.4%
SG&A 29,302 22,742 28.8%
--------- --------
Income from Operations 5,694 5,475 4.0%
Interest Expense 536 480 11.7%
Other Income (45) (51) (11.8%)
--------- --------
Income Before Taxes 5,203 5,046 3.1%
Tax Provision 2,071 2,038 1.6%
--------- --------
Net Income $3,132 $3,008 4.1%
========= ========
Diluted Earnings Per Share from Net
Income $0.28 $0.28
========= ========
Weighted Average Shares 11,217 10,660
LIFETIME HOAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September September
30, 30,
2004 2003
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $689 $213
Accounts receivable, net 31,067 28,114
Merchandise inventories 64,053 56,357
Prepaid expenses and other current assets 8,607 5,909
--------- ---------
TOTAL CURRENT ASSETS 104,416 90,593
PROPERTY AND EQUIPMENT, net 19,727 19,985
INTANGIBLES, net 29,803 23,660
OTHER ASSETS 2,213 2,120
--------- ---------
TOTAL ASSETS $156,159 $136,358
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $27,200 $26,500
Accounts payable and trade acceptances 8,721 7,482
Other current liabilities 22,303 20,100
--------- ---------
TOTAL CURRENT LIABILITIES 58,224 54,082
DEFERRED RENT & OTHER LONG TERM LIABILITIES 1,800 722
DEFERRED INCOME TAX LIABILITIES 3,300 1,412
LONG-TERM DEBT 5,000 -
STOCKHOLDERS' EQUITY 87,835 80,142
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $156,159 $136,358
========= =========
CONTACT: Lifetime Hoan Corporation
Robert McNally, 516-683-6000
or
Investor Relations
Lippert/Heilshorn & Associates, Inc.
Harriet Fried, 212-838-3777
hfried@lhai.com
SOURCE: Lifetime Hoan Corporation