Lifetime Brands Reports Fourth Quarter and Full Year 2009 Results
GARDEN CITY, N.Y., Mar 11, 2010 (BUSINESS WIRE) -- Lifetime Brands, Inc. (NASDAQ: LCUT), North America's leading resource for nationally branded kitchenware, tabletop and home décor products, today announced its results for the fourth quarter and year ended December 31, 2009.
For the fourth quarter of 2009, net sales totaled $128.1 million compared to $156.7 million for the fourth quarter of 2008. The Company reported net income of $5.0 million, or $0.41 per diluted share for the fourth quarter of 2009, compared to a net loss of $36.8 million, or $3.07 per diluted share, for the fourth quarter of 2008.
For the fourth quarter of 2009, wholesale segment net sales were $118.2 million, as compared to $119.1 million for the fourth quarter of 2008. Direct to consumer ("DTC") segment net sales for the fourth quarter of 2009 were $9.9 million. The DTC segment's comparable net sales for the fourth quarter of 2008, which exclude net sales of the Company's retail outlet stores that were closed by the end of 2008, were $10.7 million.
Net sales for the year ended December 31, 2009 were $415.0 million compared to $487.9 million for 2008. Net income for the year was $2.7 million, or $0.22 per diluted share, compared to a net loss of $47.8 million, or $3.99 per diluted share, in the prior year. The Company's 2009 results include restructuring charges of $2.6 million and the Company's 2008 results include goodwill and intangible asset impairment and restructuring charges totaling $47.4 million.
For 2009, wholesale segment net sales were $389.0 million compared to $403.6 million in 2008. The decrease primarily reflects lower net sales in the Company's food preparation category, primarily reflecting changes in the Company's key customers' sourcing patterns and in product mix, the absence of sales to Linens 'N Things and a decrease in the net sales of the Company's home décor category resulting from the Company's elimination of certain low margin business. The decreases in these categories were offset, in part, by the benefit of a full year of sales of Mikasa(R) products in the Company's tabletop category and the added net sales of the Company's new line of thermal mugs and water bottles.
Net sales for the Company's DTC segment for the year ended December 31, 2009 were $26.0 million. The DTC segment's comparable net sales for 2008, which exclude net sales of the Company's retail outlet stores that were closed by the end of 2008, were $28.5 million.
Adjusted EBITDA, a non-GAAP measure, which the Company defines as net income (loss) before interest, taxes, depreciation and amortization, restructuring expenses, goodwill and intangible asset impairment and stock option expense, as shown in the table below, was $34.0 million for 2009, as compared to $10.5 million in 2008.
Jeffrey Siegel, Chairman, Chief Executive Officer and President, commented, "2009 ended on a very positive note for Lifetime Brands. Throughout the year, we focused on expanding our market share, improving our gross margin, controlling expenses and reducing inventory. While the business environment was consistently challenging, with soft consumer spending exacerbated by retailers' destocking actions, our strategy of providing products that set us apart from the competition produced solid results for the fourth quarter and the full year.
"Offering trusted brands and outstanding design at significant values, we grew our Mikasa(R) brand in all tabletop categories and re-energized the Pfaltzgraff(R) brand in casual dinnerware. Our new Design for Living(R) line of water bottles and thermal mugs continues to grow.
"Grupo Vasconia S.A.B., in which we own a 30% interest, posted strong results for 2009. Net sales and net income in Mexican Pesos increased 5% and 77%, respectively. These gains were driven by strong increases in sales of kitchen and tabletop products across all distribution channels. Sales of aluminum blanks and other commodity products produced by its mill operations decreased, reflecting both lower demand and lower world aluminum prices. For 2009, Lifetime's equity in Grupo Vasconia's earnings, net of taxes, increased to $2.2 million, as compared to $1.5 million in 2008, notwithstanding a weaker Mexican Peso in the 2009 period.
"Continuing the success of our ongoing restructuring activities, Selling, General and Administrative Expense ("SG&A") decreased by $9.4 million for the fourth quarter and $35.6 million for the year, reductions of 25.8% and 27.1%, respectively, compared to 2008. Inventory at year-end 2009 was $103.9 million, compared to $141.6 million at December 31, 2008, a decrease of 26.6%. Lower inventory levels combined with strong cash flow enabled us to reduce the Company's borrowings under our bank credit agreement to $24.6 million at year-end 2009, a decrease of 72% from $89.3 million at December 31, 2008.
"In 2010, we expect economic conditions to remain challenging throughout the year, with modest, if any, organic growth in market size, continued cautious spending by consumers and lean inventory levels at retail. Nevertheless, we expect to be able to gain market share and achieve some sales growth in all of our product categories."
Conference Call
Lifetime has scheduled a conference call for Thursday, March 11, 2010 at 11:00 a.m. ET to discuss its fourth-quarter and full-year 2009 results. The dial-in number for the call is 706-679-7464; the conference ID is #58031243. 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, March 18, 2010 and can be accessed by dialing 706-645-9291, conference ID #58031243. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.
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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CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
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(In thousands, except per share data) | |||||||||||||||||||||
| Three Months Ended
December 31, |
Year Ended
December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
| Net sales | $ | 128,070 | $ | 156,718 | $ | 415,040 | $ | 487,935 | |||||||||||||
| Cost of sales | 76,807 | 102,546 | 257,839 | 303,535 | |||||||||||||||||
| Distribution expenses | 12,466 | 17,436 | 43,329 | 57,695 | |||||||||||||||||
| Selling, general and administrative expenses | 27,064 | 36,475 | 95,647 | 131,226 | |||||||||||||||||
| Goodwill and intangible asset impairment | -- | 29,400 | -- | 29,400 | |||||||||||||||||
| Restructuring expenses | 1,784 | 10,410 | 2,616 | 17,992 | |||||||||||||||||
| Income (loss) from operations | 9,949 | (39,549 | ) | 15,609 | (51,913 | ) | |||||||||||||||
| Interest expense | (4,124 | ) | (3,371 | ) | (13,185 | ) | (11,577 | ) | |||||||||||||
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Income (loss) before income taxes and equity in |
5,825 | (42,920 | ) | 2,424 | (63,490 | ) | |||||||||||||||
| Income tax benefit (provision) | (1,311 | ) | 5,993 | (1,880 | ) | 14,249 | |||||||||||||||
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Equity in earnings of Grupo Vasconia, S.A.B., net of |
534 | 132 | 2,171 | 1,486 | |||||||||||||||||
| NET INCOME (LOSS) | $ | 5,048 | $ | (36,795 | ) | $ | 2,715 | $ | (47,755 | ) | |||||||||||
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BASIC INCOME (LOSS) PER COMMON |
$ | 0.42 | $ | (3.07 | ) | $ | 0.23 | $ | (3.99 | ) | |||||||||||
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DILUTED INCOME (LOSS) PER COMMON |
$ | 0.41 | $ | (3.07 | ) | $ | 0.22 | $ | (3.99 | ) | |||||||||||
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LIFETIME BRANDS, INC. | |||||||||||||||
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CONSOLIDATED BALANCE SHEETS | |||||||||||||||
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(In thousands-except share data) | |||||||||||||||
| December 31, | |||||||||||||||
| ASSETS | 2009 | 2008 | |||||||||||||
| CURRENT ASSETS | |||||||||||||||
| Cash and cash equivalents | $ | 682 | $ | 3,478 | |||||||||||
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Accounts receivable, less allowances of $16,557 at 2009 |
61,552 | 67,562 | |||||||||||||
| Inventory | 103,931 | 141,612 | |||||||||||||
| Income taxes receivable | -- | 11,597 | |||||||||||||
| Prepaid expenses and other current assets | 7,685 | 8,429 | |||||||||||||
| TOTAL CURRENT ASSETS | 173,850 | 232,678 | |||||||||||||
| PROPERTY AND EQUIPMENT, net | 41,623 | 49,908 | |||||||||||||
| OTHER INTANGIBLES, net | 37,641 | 38,420 | |||||||||||||
| INVESTMENT IN GRUPO VASCONIA, S.A.B. | 20,338 | 17,784 | |||||||||||||
| OTHER ASSETS | 3,271 | 2,991 | |||||||||||||
| TOTAL ASSETS | $ | 276,723 | $ | 341,781 | |||||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES |
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| Short-term borrowings | $ | 24,601 | $ | 89,300 | |||||||||||
| Accounts payable | 21,895 | 24,151 | |||||||||||||
| Accrued expenses | 29,827 | 36,530 | |||||||||||||
| Deferred income tax liabilities | 207 | -- | |||||||||||||
| Income taxes payable | 680 | -- | |||||||||||||
| TOTAL CURRENT LIABILITIES | 77,210 | 149,981 | |||||||||||||
| DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 20,527 | 23,054 | |||||||||||||
| DEFERRED INCOME TAXES | 4,447 | 3,373 | |||||||||||||
| CONVERTIBLE NOTES | 70,527 | 67,864 | |||||||||||||
| STOCKHOLDERS' EQUITY | |||||||||||||||
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Common stock, $.01 par value, shares authorized: 25,000,000; shares |
120 | 120 | |||||||||||||
| Paid-in capital | 129,655 | 127,497 | |||||||||||||
| Accumulated deficit | (18,949 | ) | (21,515 | ) | |||||||||||
| Accumulated other comprehensive loss | (6,814 | ) | (8,593 | ) | |||||||||||
| TOTAL STOCKHOLDERS' EQUITY | 104,012 | 97,509 | |||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 276,723 | $ | 341,781 | |||||||||||
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LIFETIME BRANDS, INC. | ||||||||||||||||||
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Supplemental Information | ||||||||||||||||||
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Reconciliation of GAAP to Non-GAAP Operating Results | ||||||||||||||||||
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(In thousands) | ||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||
| Net income (loss) reported | $ | 5,048 | $ | (36,795 | ) | $ | 2,715 | $ | (47,755 | ) | ||||||||
| Add back: | ||||||||||||||||||
| Provision (benefit) for income taxes | 1,311 | (5,993 | ) | 1,880 | (14,249 | ) | ||||||||||||
| Interest expense | 4,124 | 3,371 | 13,185 | 11,577 | ||||||||||||||
| Depreciation and amortization | 3,023 | 2,829 | 11,472 | 10,782 | ||||||||||||||
| Restructuring expenses | 1,784 | 10,410 | 2,616 | 17,992 | ||||||||||||||
| Goodwill and intangible asset impairment | -- | 29,400 | -- | 29,400 | ||||||||||||||
| Stock option expense | 611 | 957 | 2,099 | 2,800 | ||||||||||||||
| Adjusted EBITDA | $ | 15,901 | $ | 4,179 | $ | 33,967 | $ | 10,547 | ||||||||||
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, 212-838-3777
Senior Vice President
hfried@lhai.com