UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 8-K
__________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 5, 2020
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(Exact Name of Registrant as Specified in Its Charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 5, 2020 , Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the third quarter ended September 30, 2020. A copy of the Company’s press release is furnished as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Index
| Exhibit No. | ||||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL document) | |||||||
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Lifetime Brands, Inc. | ||||||||
| By: | /s/ Laurence Winoker | |||||||
| Laurence Winoker Senior Vice President – Finance, Treasurer and Chief Financial Officer | ||||||||
Date: November 5, 2020
Exhibit 99.1
Lifetime Brands, Inc. Reports Third Quarter 2020 Financial Results
Declares Regular Quarterly Dividend
GARDEN CITY, NY, November 5, 2020 – Lifetime Brands, Inc. (NasdaqGS: LCUT), a leading global designer, developer and marketer of a broad range of branded consumer products used in the home, today reported its financial results for the quarter ended September 30, 2020.
Robert Kay, Lifetime’s Chief Executive Officer, commented, “We are pleased with our strong performance in the third quarter, which marks another quarter of sales and earnings growth as we continue to make progress executing on our strategic plan.
Highlighting our performance, net income for the quarter was $13.9 million compared with a net loss of $(13.5) million for the quarter a year ago. Correspondingly, EBITDA continues to grow reaching $72.7 million for the last 12 month period or an increase of approximately 5% over the prior quarter and nearly 20% since the first quarter of 2020. Our U.S. business continues to show strength as it delivers its fifth consecutive quarter of year-over-year growth with market share gains. This increase is driven by our household products, led by our kitchenware products category, which continues to experience high consumer demand and gain market share across most of our channels that we sell into. Additionally, our ability to efficiently execute our transformative initiatives, including increasing our drop ship capabilities and digital tools, combined with effectively managing our supply chain, have positioned us well, and allowed us to meet increased demand and gain market share."
Mr. Kay continued, "Consistent with expectations, our operations in Europe have stabilized and end markets have continued to recover. As a result, this quarter we delivered growth of 14.3%, or 9.9% in constant currency, in our international business over the prior year, and the turnaround plan that we implemented for this business remains on track. In terms of cost management, our disciplined focus has created a leaner organization and we remain diligent on maintaining a solid liquidity position and on continuing to deleverage the balance sheet. Looking ahead, we are committed to increasing investments in growth initiatives, including continued enhancement of our digital marketing and e-commerce capabilities, expanding our international business and building out our commercial foodservice business. While we navigate the impact of the ongoing pandemic, we remain confident in our ability to deliver value to our stakeholders through our proven Lifetime 2.0 strategic plan.”
Third Quarter Financial Highlights:
Consolidated net sales for the three months ended September 30, 2020 were $224.8 million, representing an increase of $9.3 million, or 4.3%, as compared to net sales of $215.5 million for the corresponding period in 2019. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2020 average rates to 2019 local currency amounts, consolidated net sales increased by $8.4 million, or 3.9%, as compared to consolidated net sales in the corresponding period in 2019.
Gross margin for the three months ended September 30, 2020 was $78.8 million, or 35.1%, as compared to $72.9 million, or 33.8%, for the corresponding period in 2019.
Income from operations was $21.5 million, as compared to income from operations of $6.9 million for the corresponding period in 2019. Excluding a $9.7 million non-cash charge for goodwill impairment, income from operations would have been $16.7 million, for the corresponding period in 2019. A table which reconciles this non-GAAP financial measure to income from operations, as reported, is included below.
Net income was $13.9 million, or $0.65 per diluted share, as compared to a net loss of $(13.5) million, or $(0.66) per diluted share, in the corresponding period in 2019.
Adjusted net income of $13.9 million, or $0.65 per diluted share, as compared to adjusted net loss, of $(3.0) million, or $(0.15) per diluted share, in the corresponding period in 2019. A table which reconciles this non-GAAP financial measure to net income (loss), as reported, is included below.
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Nine Months Financial Highlights:
Consolidated net sales for the nine months ended September 30, 2020 were $520.0 million, representing an increase of $12.0 million, or 2.4%, as compared to net sales of $508.0 million for the corresponding period in 2019. In constant currency, net sales also increased by $12.0 million, or 2.4%, as compared to consolidated net sales in the corresponding period in 2019.
Gross margin for the nine months ended September 30, 2020 was $185.9 million, or 35.8%, as compared to $171.3 million, or 33.7%, for the corresponding period in 2019.
Income from operations was $0.6 million in 2020, as compared to a loss from operations of $(7.9) million for the corresponding period in 2019. Income from operations, excluding the impact of certain non-cash charges, was $23.5 million compared to income from operations, excluding the impact of certain non-cash charges, of $10.3 million in the corresponding period in 2019. A table which reconciles this non-GAAP financial measure to income (loss) from operations, as reported, is included below.
Net loss was $(18.2) million, or $(0.87) per diluted share, as compared to a net loss of $(29.9) million, or $(1.46) per diluted share, in the corresponding period in 2019. This includes a non-cash impairment charges of $20.1 million and $9.7 million incurred in the first quarter of 2020 and the third quarter of 2019, respectively.
Adjusted net income was $5.1 million, or $0.24 per diluted share in 2020, as compared to adjusted net loss of $(11.7) million, or $(0.57) per diluted share in 2019. A table which reconciles this non-GAAP financial measure to net loss, as reported, is included below.
Consolidated adjusted EBITDA, after giving effect to certain adjustments as permitted and defined under our debt agreements, was $72.7 million for the twelve months ended September 30, 2020. A table which reconciles this non-GAAP financial measure to net income (loss), as reported, is included below.
Outlook
As a result of the uncertainty surrounding the COVID-19 pandemic, the Company is not providing outlook for the full fiscal year 2020.
Dividend
On November 3, 2020, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on February 12, 2021 to shareholders of record on January 29, 2021.
Conference Call
The Company has scheduled a conference call for Thursday, November 5, 2020 at 11:00 a.m. The dial-in number for the conference call is (866) 610-1072 (U.S.) or (973) 935-2840 (International), Conference ID: 8275007.
A live webcast of the conference call will be accessible through:
https://event.on24.com/wcc/r/2796914/9438665109E42AC8135FA95CE5D2DFFE
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, income from operations excluding certain non-cash charges, adjusted net income (loss), adjusted diluted income (loss) per common share, gross margin (excluding non-recurring charges) 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 period-to-period comparison of the Company’s operating performance by investors and analysts. Management uses these non-GAAP financial measures as indicators of business performance. These non-
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GAAP financial measures should be viewed as a supplement to, and not a substitute for, GAAP financial measures of performance.
Forward-Looking Statements
In this press release, the use of the words “believe,” “could,” “expect,” “intend,” “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 ability to navigate the current environment and advance our strategy, our commitment to increasing investments in future growth initiatives, our initiatives to create value, our efforts to mitigate geopolitical factors and tariffs, our efforts to stabilize our international business, our current and projected financial and operating performance, results, and profitability and all guidance related thereto, including forecasted exchange rates and effective tax rates, 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 successful implementation of the Company's turnaround plan for its international business; 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, as well as to deleverage its balance sheet; the possibility of impairments to the Company’s goodwill; the possibility of impairments to the Company’s intangible assets; 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; the impact of our SKU rationalization initiative, expenses and other challenges relating to the integration of any 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; shortages of and price volatility for certain commodities; global health epidemics, such as the COVID-19 pandemic; social unrest, including related protests and disturbances, 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 designer, developer and marketer of a broad range of branded consumer 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®, Swing-A-Way®, Taylor® Kitchen, and Rabbit®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Fitz and Floyd®, Creative Tops®, Empire Silver™, Gorham®, International® Silver, Kirk Stieff®, Towle® Silversmiths, Wallace®, Wilton Armetale®, V&A® and Royal Botanic Gardens Kew®; and valued home solutions brands, including BUILT NY®, Taylor® Bath, Taylor® Kitchen, Taylor® Weather and Planet Box®. 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 / Rose Temple
212-355-4449
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands—except per share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net sales | $ | 224,750 | $ | 215,502 | $ | 519,960 | $ | 507,964 | |||||||||||||||
| Cost of sales | 145,958 | 142,561 | 334,066 | 336,683 | |||||||||||||||||||
| Gross margin | 78,792 | 72,941 | 185,894 | 171,281 | |||||||||||||||||||
| Distribution expenses | 18,961 | 18,537 | 50,710 | 49,938 | |||||||||||||||||||
| Selling, general and administrative expenses | 38,325 | 37,389 | 114,274 | 118,379 | |||||||||||||||||||
| Restructuring expenses | — | 338 | 253 | 1,119 | |||||||||||||||||||
| Goodwill and other impairments | — | 9,748 | 20,100 | 9,748 | |||||||||||||||||||
Income (loss) from operations | 21,506 | 6,929 | 557 | (7,903) | |||||||||||||||||||
| Interest expense | (4,128) | (5,539) | (13,094) | (15,505) | |||||||||||||||||||
Mark to market gain (loss) on interest rate derivatives | 99 | 367 | (2,316) | 717 | |||||||||||||||||||
Income (loss) before income taxes and equity in earnings (losses) | 17,477 | 1,757 | (14,853) | (22,691) | |||||||||||||||||||
Income tax provision | (3,711) | (15,066) | (3,013) | (6,813) | |||||||||||||||||||
Equity in earnings (losses), net of taxes | 147 | (210) | (362) | (395) | |||||||||||||||||||
NET INCOME (LOSS) | $ | 13,913 | $ | (13,519) | $ | (18,228) | $ | (29,899) | |||||||||||||||
BASIC INCOME (LOSS) PER COMMON SHARE | $ | 0.66 | $ | (0.66) | $ | (0.87) | $ | (1.46) | |||||||||||||||
DILUTED INCOME (LOSS) PER COMMON SHARE | $ | 0.65 | $ | (0.66) | $ | (0.87) | $ | (1.46) | |||||||||||||||
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands—except share data)
| September 30, 2020 | December 31, 2019 | ||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | 42,675 | $ | 11,370 | |||||||
Accounts receivable, less allowances of $14,782 at September 30, 2020 and $9,681 at December 31, 2019 | 180,289 | 128,639 | |||||||||
| Inventory | 209,825 | 173,427 | |||||||||
| Prepaid expenses and other current assets | 9,619 | 14,140 | |||||||||
| Income taxes receivable | — | 1,577 | |||||||||
| TOTAL CURRENT ASSETS | 442,408 | 329,153 | |||||||||
| PROPERTY AND EQUIPMENT, net | 23,839 | 28,168 | |||||||||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 98,126 | 106,871 | |||||||||
| INVESTMENTS | 17,734 | 21,289 | |||||||||
| INTANGIBLE ASSETS, net | 247,180 | 280,471 | |||||||||
| OTHER ASSETS | 2,559 | 4,071 | |||||||||
| TOTAL ASSETS | $ | 831,846 | $ | 770,023 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Current maturity of term loan | $ | 18,522 | $ | 8,413 | |||||||
| Accounts payable | 109,509 | 36,173 | |||||||||
| Accrued expenses | 81,167 | 52,060 | |||||||||
| Income taxes payable | 1,522 | — | |||||||||
| Current portion of operating lease liabilities | 11,329 | 10,661 | |||||||||
| TOTAL CURRENT LIABILITIES | 222,049 | 107,307 | |||||||||
| OTHER LONG-TERM LIABILITIES | 16,394 | 12,214 | |||||||||
| INCOME TAXES PAYABLE, LONG-TERM | 1,217 | 1,217 | |||||||||
| OPERATING LEASE LIABILITIES | 104,183 | 112,180 | |||||||||
| DEFERRED INCOME TAXES | 12,829 | 13,685 | |||||||||
| REVOLVING CREDIT FACILITY | 25,654 | 32,822 | |||||||||
| TERM LOAN | 237,727 | 254,281 | |||||||||
| 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, $0.01 par value, shares authorized: 50,000,000 at September 30, 2020 and December 31, 2019; shares issued and outstanding: 21,768,020 at September 30, 2020 and 21,255,660 at December 31, 2019 | 218 | 213 | |||||||||
| Paid-in capital | 267,200 | 263,386 | |||||||||
(Accumulated deficit) retained earnings | (13,842) | 7,173 | |||||||||
Accumulated other comprehensive loss | (41,783) | (34,455) | |||||||||
| TOTAL STOCKHOLDERS’ EQUITY | 211,793 | 236,317 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 831,846 | $ | 770,023 | |||||||
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
Net loss | $ | (18,228) | $ | (29,899) | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 18,385 | 18,771 | |||||||||
| Goodwill and other impairments | 20,100 | 9,748 | |||||||||
| Amortization of financing costs | 1,326 | 1,312 | |||||||||
Mark to market loss (gain) on interest rate derivatives | 2,316 | (717) | |||||||||
| Non-cash lease expense | 2,915 | 1,050 | |||||||||
| Provision for doubtful accounts | 3,011 | 316 | |||||||||
| Stock compensation expense | 4,321 | 3,605 | |||||||||
Undistributed equity in losses, net of taxes | 362 | 395 | |||||||||
| SKU Rationalization | — | 8,500 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (55,466) | (37,659) | |||||||||
| Inventory | (37,303) | (66,195) | |||||||||
| Prepaid expenses, other current assets and other assets | 3,573 | 1,473 | |||||||||
| Accounts payable, accrued expenses and other liabilities | 100,798 | 43,465 | |||||||||
| Income taxes receivable | 1,577 | 1,442 | |||||||||
| Income taxes payable | 1,521 | 4,434 | |||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 49,208 | (39,959) | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Purchases of property and equipment | (1,645) | (7,618) | |||||||||
NET CASH USED IN INVESTING ACTIVITIES | (1,645) | (7,618) | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from revolving credit facility | 107,418 | 258,647 | |||||||||
| Repayments of revolving credit facility | (113,652) | (208,737) | |||||||||
| Repayments of term loan | (7,583) | (2,063) | |||||||||
| Payments for finance lease obligations | (75) | (18) | |||||||||
| Payments of tax withholding for stock based compensation | (486) | (390) | |||||||||
| Proceeds from the exercise of stock options | — | 133 | |||||||||
| Cash dividends paid | (1,862) | (2,693) | |||||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (16,240) | 44,879 | |||||||||
| Effect of foreign exchange on cash | (18) | (188) | |||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 31,305 | (2,886) | |||||||||
| Cash and cash equivalents at beginning of period | 11,370 | 7,647 | |||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 42,675 | $ | 4,761 | |||||||
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LIFETIME BRANDS, INC.
Supplemental Information
(in thousands)
Reconciliation of GAAP to Non-GAAP Operating Results
Consolidated adjusted EBITDA for the twelve months ended September 30, 2020:
| Consolidated adjusted EBITDA for the Four Quarters Ended September 30, 2020 | |||||
| (in thousands) | |||||
| Three months ended September 30, 2020 | $ | 29,228 | |||
| Three months ended June 30, 2020 | 12,388 | ||||
| Three months ended March 31, 2020 | 3,252 | ||||
| Three months ended December 31, 2019 | 27,873 | ||||
| Consolidated adjusted EBITDA | $ | 72,741 | |||
| Three Months Ended | Twelve Months Ended September 30, 2020 | ||||||||||||||||||||||||||||
| December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | ||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Net (loss) income as reported | $ | (14,516) | $ | (28,164) | $ | (3,977) | $ | 13,913 | $ | (32,744) | |||||||||||||||||||
| Undistributed equity losses (earnings), net | (738) | (339) | 848 | (147) | (376) | ||||||||||||||||||||||||
| Income tax (benefit) provision | (5,704) | (3,729) | 3,031 | 3,711 | (2,691) | ||||||||||||||||||||||||
| Interest expense | 5,590 | 4,736 | 4,230 | 4,128 | 18,684 | ||||||||||||||||||||||||
| Mark to market loss (gain) on interest rate derivatives | — | 2,251 | 164 | (99) | 2,316 | ||||||||||||||||||||||||
| Depreciation and amortization | 6,344 | 6,234 | 6,061 | 6,090 | 24,729 | ||||||||||||||||||||||||
| Goodwill and other impairments | 33,242 | 20,100 | — | — | 53,342 | ||||||||||||||||||||||||
| Stock compensation expense | 1,436 | 1,326 | 1,420 | 1,575 | 5,757 | ||||||||||||||||||||||||
| Acquisition and divestment related expenses | 55 | 47 | 55 | 57 | 214 | ||||||||||||||||||||||||
| Restructuring expenses | 316 | — | 253 | — | 569 | ||||||||||||||||||||||||
| Integration charges | 159 | — | — | — | 159 | ||||||||||||||||||||||||
| Warehouse relocation | 1,689 | 790 | 303 | — | 2,782 | ||||||||||||||||||||||||
| Consolidated adjusted EBITDA | $ | 27,873 | $ | 3,252 | $ | 12,388 | $ | 29,228 | $ | 72,741 | |||||||||||||||||||
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 (benefit) provision, interest expense, mark to market loss (gain) on interest rate derivatives, depreciation and amortization, goodwill and other impairments, stock compensation expense, and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.
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LIFETIME BRANDS, INC.
Supplemental Information
(in thousands—except per share data)
Reconciliation of GAAP to Non-GAAP Operating Results (continued)
Adjusted net income (loss) and adjusted diluted income (loss) per common share (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net income (loss) as reported | $ | 13,913 | $ | (13,519) | $ | (18,228) | $ | (29,899) | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Acquisition and divestment related expenses | 57 | — | 159 | 151 | |||||||||||||||||||
Restructuring expenses | — | 338 | 253 | 1,119 | |||||||||||||||||||
Integration charges | — | 235 | — | 1,104 | |||||||||||||||||||
Warehouse relocation | — | 881 | 1,093 | 1,096 | |||||||||||||||||||
| Mark to market loss (gain) on interest rate derivatives | (99) | (367) | 2,316 | (717) | |||||||||||||||||||
| Goodwill and other impairments | — | 9,748 | 20,100 | 9,748 | |||||||||||||||||||
SKU Rationalization | — | — | — | 8,500 | |||||||||||||||||||
| Foreign currency translation loss reclassified from Accumulated Other Comprehensive Loss | — | — | 235 | — | |||||||||||||||||||
Income tax effect on adjustments | 11 | (330) | (878) | (2,848) | |||||||||||||||||||
Adjusted net income (loss) | $ | 13,882 | $ | (3,014) | $ | 5,050 | $ | (11,746) | |||||||||||||||
Adjusted diluted income (loss) per common share(1) | $ | 0.65 | $ | (0.15) | $ | 0.24 | $ | (0.57) | |||||||||||||||
Adjusted net income (loss) and adjusted diluted income (loss) per common share in the three and nine months ended September 30, 2020 and 2019 excludes acquisition and divestment related expenses, restructuring expenses, integration charges, warehouse relocation expenses, mark to market loss on interest rate derivatives, goodwill and other impairments and SKU Rationalization. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.
(1) Adjusted diluted income per common share is calculated based on diluted weighted-average shares outstanding of 21,285 and 20,429 for the three month period ended September 30, 2020 and 2019, respectively, and 21,015 and 20,494 for the nine month period ended September 30, 2020 and 2019, respectively. The diluted weighted-average shares outstanding for the three and nine month period ended September 30, 2020 include the effect of dilutive securities of 350 and 180 shares, respectively.
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LIFETIME BRANDS, INC.
Supplemental Information
(in thousands)
Reconciliation of GAAP to Non-GAAP Operating Results (continued)
Constant Currency:
As Reported Three Months Ended September 30, | Constant Currency (1) Three Months Ended September 30, | Year-Over-Year Increase (Decrease) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | 2020 | 2019 | Increase (Decrease) | 2020 | 2019 | Increase (Decrease) | Currency Impact | Excluding Currency | Including Currency | Currency Impact | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 201,539 | $ | 195,199 | $ | 6,340 | $ | 201,539 | $ | 195,208 | $ | 6,331 | $ | (9) | 3.2% | 3.2% | 0.0% | ||||||||||||||||||||||||||||||||||||||||||
| International | 23,211 | 20,303 | 2,908 | 23,211 | 21,126 | 2,085 | (823) | 9.9% | 14.3% | (4.4)% | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 224,750 | $ | 215,502 | $ | 9,248 | $ | 224,750 | $ | 216,334 | $ | 8,416 | $ | (832) | 3.9% | 4.3% | (0.4)% | ||||||||||||||||||||||||||||||||||||||||||
As Reported Nine Months Ended September 30, | Constant Currency (1) Nine Months Ended September 30, | Year-Over-Year Increase (Decrease) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | 2020 | 2019 | Increase (Decrease) | 2020 | 2019 | Increase (Decrease) | Currency Impact | Excluding Currency | Including Currency | Currency Impact | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 463,338 | $ | 445,329 | $ | 18,009 | $ | 463,338 | $ | 445,331 | $ | 18,007 | $ | (2) | 4.0% | 4.0% | 0.0% | ||||||||||||||||||||||||||||||||||||||||||
| International | 56,622 | 62,635 | (6,013) | 56,622 | 62,582 | (5,960) | 53 | (9.5)% | (9.6)% | 0.1% | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 519,960 | $ | 507,964 | $ | 11,996 | $ | 519,960 | $ | 507,913 | $ | 12,047 | $ | 51 | 2.4% | 2.4% | 0.0% | ||||||||||||||||||||||||||||||||||||||||||
(1) “Constant Currency” is determined by applying the 2020 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 fluctuations in foreign currency exchange rates.
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LIFETIME BRANDS, INC.
Supplemental Information
(in thousands)
Reconciliation of GAAP to Non-GAAP Operating Results (continued)
Income (loss) from operations excluding certain non-cash charges (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Income (loss) from operations | $ | 21,506 | $ | 6,929 | $ | 557 | $ | (7,903) | |||||||||||||||
| Excluded non-cash charges: | |||||||||||||||||||||||
| Goodwill and other impairments | — | 9,748 | 20,100 | 9,748 | |||||||||||||||||||
Bad debt reserve (1) | — | — | 2,844 | — | |||||||||||||||||||
| SKU Rationalization | — | — | — | 8,500 | |||||||||||||||||||
| Total excluded non-cash charges | — | 9,748 | 22,944 | 18,248 | |||||||||||||||||||
Income from operations excluding certain non-cash charges | $ | 21,506 | $ | 16,677 | $ | 23,501 | $ | 10,345 | |||||||||||||||
(1) Bad debt reserve recorded in the first quarter of fiscal 2020 to establish a provision against potential credit problems from certain retail customers who may have financial difficulty that has been caused or increased due to the COVID-19 pandemic. This reflects the Company's assessment of risk of not being able to collect such receivables from certain customers in the U.S. that are at risk of seeking or have already obtained bankruptcy protection and our international customer base which has a higher proportion of small and independent brick-and-mortar retailers. This charge was taken in response to the Company's assessment on the impact of the COVID-19 pandemic on these accounts.
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