Lifetime Brands, Inc. Reports Fourth Quarter 2016 Financial Results
Company Reports Record Fourth Quarter Revenues and Income from Operations
Declares Regular Quarterly Dividend
Fourth Quarter Financial Highlights:
Consolidated net sales were
Gross margin was
Income from operations was
Net income was
Adjusted net income was
Consolidated adjusted EBITDA was
Equity in earnings, net of taxes, was
Full Year Financial Highlights:
Consolidated net sales were
Gross margin was
Income from operations was
Net income was
Adjusted net income was
Consolidated adjusted EBITDA was
Equity in earnings, net of taxes, was
“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
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.
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
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. |