Lifetime Brands, Inc. Reports Third Quarter Financial Results

Company Reports Record Third Quarter Revenues, Net Income Increased 26% over Third Quarter 2015 and Record Third Quarter EBITDA

Declares Regular Quarterly Dividend

GARDEN CITY, N.Y., Nov. 08, 2016 (GLOBE NEWSWIRE) -- Lifetime Brands, Inc. (NasdaqGS:LCUT), a leading global provider of branded kitchenware, tableware and other products used in the home, today reported its financial results for the third quarter ended September 30, 2016.

Third Quarter Financial Highlights:

Consolidated net sales were $170.1 million, as compared to consolidated net sales of $163.2 million in the corresponding period in 2015. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased 6.4%, as compared to consolidated net sales in the corresponding period in 2015.

Gross margin was $58.3 million, or 34.3%, as compared to $57.0 million, or 34.9%, for the corresponding period in 2015.

Income from operations was $10.8 million, as compared to $9.8 million for the corresponding period in 2015.

Net income was $6.5 million, or $0.44 per diluted share, as compared to net income of $5.1 million, or $0.36 per diluted share, in the corresponding period in 2015.  

Adjusted net income was $7.5 million, or $0.51 per diluted share, as compared to adjusted net income of $5.9 million, or $0.41 per diluted share, in the corresponding period in 2015.

Consolidated EBITDA was $16.7 million, as compared to $14.1 million for the corresponding 2015 period.

Equity in losses, net of taxes, was $138,000, as compared to equity in losses, net of taxes, of $0.5 million in the corresponding 2015 period.

Nine Months Financial Highlights:

Consolidated net sales were $399.1 million, as compared to consolidated net sales of $401.8 million for the corresponding period in 2015.  In constant currency, consolidated net sales increased 0.8%.

Gross margin was $141.9 million, or 35.5%, as compared to $145.4 million, or 36.2%, for the corresponding period in 2015.

Income from operations was $5.3 million, as compared to $6.6 million, for the corresponding period in 2015.

Net income was $1.0 million, or $0.07 per diluted share, as compared to net income of $1.3 million, or $0.09 per diluted share, in the 2015 period. 

Adjusted net income was $4.2 million, or $0.29 per diluted share, as compared to $3.4 million, or $0.24 per diluted share, in the 2015 period. 

Consolidated EBITDA was $22.1 million, as compared to $21.0 million for the corresponding 2015 period.

Equity in losses, net of taxes, was $0.3 million, as compared to equity in losses, net of taxes, of $0.2 million in the corresponding 2015 period.

Jeffrey Siegel, Lifetime's Chairman and Chief Executive Officer, commented,

"For the three months ended September 30, 2016, net income increased 26% over the three months ended September 30, 2015 and Lifetime achieved record revenue, record adjusted net income and record EBITDA, demonstrating the Company's ability to deliver organic growth and solid financial results in the face of an uncertain economic climate in the United States and despite unfavorable exchange rate fluctuations that affected the results of our U.K. subsidiaries and our partner companies in Canada and Mexico.

"In September, we completed the acquisition of the Amco Houseworks® and Swing-A-Way® kitchenware and the Chicago™ Metallic bakeware brands. In early October, we acquired the Copco® lines of thermal and hydration beverageware, tea kettles and kitchen organization products. These acquisitions, together with the Wilton Armetale® serveware and grillware lines that we acquired earlier in the year -- all in categories where Lifetime is already well established -- should be accretive beginning in the fourth quarter.

"Lifetime Next™, the Company's initiative to simplify and strengthen the organization for growth, begun in late 2015 in cooperation with a major international consulting firm, is well underway. We now are in the implementation phase and expect to achieve process improvement savings beginning mid-year 2017, with full completion by year-end.

"We look forward to a healthy fourth quarter, reflecting both organic growth and contributions from our recently acquired brands, offset somewhat by continued foreign exchange weakness in the U.K., Canada and Mexico."

Dividend

On Thursday, November 3, 2016, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on February 15, 2017 to shareholders of record on February 1, 2017.

Conference Call

The Company has scheduled a conference call for Tuesday, November 8, 2016 at 11:00 a.m. The dial-in number for the conference call is (844) 787-0801 or (661) 378-9632, passcode #3118093. A live webcast of the conference call will be accessible through http://edge.media-server.com/m/p/qqzw776u. 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. 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 SEC rules, 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 evaluating the Company's on-going financial results and trends, and management believes that exclusion of certain items allows for more accurate comparison of the Company's operating performance. Management uses this non-GAAP information as an indicator of business performance.  These non-GAAP measures should be viewed as a supplement to, and not a substitute for, GAAP measures of 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 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 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 a leading global provider of kitchenware, tableware and other products used in the home. The Company markets its products under well-known kitchenware brands, including Farberware®, KitchenAid®, Sabatier®, Amco Houseworks®, Chicago™ Metallic, Copco®, Fred® & Friends, Kitchen Craft®, Kamenstein®, Kizmos™, La Cafetière®, Misto®, Mossy Oak®, Reo®, Savora™, Swing-A-Way® and Vasconia®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Creative Tops®, Empire Silver™, Gorham®, International® Silver, Kirk Stieff®, Towle® Silversmiths, Tuttle®, Wallace®, Wilton Armetale®, V&A® and Royal Botanic Gardens Kew®; and valued home solutions brands, including Bombay®, BUILT NY®, Debbie Meyer® and Design for Living™. 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.  Lippert/Heilshorn & Assoc.
Laurence Winoker, Chief Financial Officer  Harriet Fried, SVP
516-203-3590  212-838-3777
investor.relations@lifetimebrands.com  hfried@lhai.com 

LIFETIME BRANDS, INC.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands - except per share data) (unaudited)    
             
    Three Months Ended   Nine Months Ended    
    September 30,   September 30,    
      2016       2015       2016       2015      
                     
Net sales $   170,124     $   163,198     $   399,099     $   401,790      
                     
Cost of sales     111,802         106,246         257,232         256,419      
                     
Gross margin     58,322         56,952         141,867         145,371      
                     
Distribution expenses     14,531         13,348         40,225         39,378      
Selling, general and administrative expenses     33,009         33,842         94,662         99,389      
Restructuring expenses     -         -         1,701         -      
                     
Income from operations     10,782         9,762         5,279         6,604      
                     
Interest expense     (1,231 )       (1,454 )       (3,546 )       (4,344 )    
Financing expense     -         -         -         (154 )    
Loss on early retirement of debt     -         -         (272 )       -      
                     
Income before income taxes and equity in earnings     9,551         8,308         1,461         2,106      
                     
Income tax provision     (2,961 )       (2,745 )       (218 )       (665 )    
Equity in losses, net of taxes     (138 )       (459 )       (270 )       (169 )    
                     
NET INCOME   $   6,452     $   5,104     $   973     $   1,272      
                     
Weighted-average shares outstanding - basic     14,266         13,912         14,129         13,824      
                     
BASIC INCOME PER COMMON SHARE   $   0.45     $   0.37     $   0.07     $   0.09      
                     
Weighted-average shares outstanding - diluted     14,631         14,307         14,494         14,242      
                     
DILUTED INCOME PER COMMON SHARE   $   0.44     $   0.36     $   0.07     $   0.09      
                     
Cash dividends declared per common share $   0.0425     $   0.0425     $   0.1275     $   0.1175      
                     

 
LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands - except share data)
             
        September 30,   December 31,
          2016       2015  
        (unaudited)    
ASSETS      
CURRENT ASSETS      
  Cash and cash equivalents $   5,831     $   7,131  
  Accounts receivable, less allowances of $5,174 at September 30, 2016 and $5,300 at December 31, 2015   130,112       90,576  
  Inventory   171,337       136,890  
  Prepaid expenses and other current assets      8,323         8,783  
  Deferred income taxes     2,172         -  
    TOTAL CURRENT ASSETS   317,775       243,380  
             
PROPERTY AND EQUIPMENT, net     21,402         24,877  
INVESTMENTS      22,536         24,973  
INTANGIBLE ASSETS, net     96,923         96,593  
DEFERRED INCOME TAXES     7,164         6,486  
OTHER ASSETS     2,104         2,022  
      TOTAL ASSETS $ 467,904     $ 398,331  
             
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Current maturity of Credit Agreement Term Loan $ 9,851     $ 19,646  
  Short term loan      118         252  
  Accounts payable      49,228         27,245  
  Accrued expenses      52,350         40,154  
  Income taxes payable     -         4,064  
    TOTAL CURRENT LIABILITIES   111,547       91,361  
             
DEFERRED RENT & OTHER LONG-TERM LIABILITIES     19,257         18,556  
DEFERRED INCOME TAXES     9,143         8,596  
REVOLVING CREDIT FACILITY     128,686         65,617  
CREDIT AGREEMENT TERM LOAN     1,970         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 September 30, 2016 and 25,000,000 at December 31, 2015; shares issued and outstanding: 14,431,027 at September 30, 2016 and 14,030,221 at December 31, 2015     144         140  
  Paid-in capital   171,217       165,780  
  Retained earnings      46,860         47,733  
  Accumulated other comprehensive loss   (20,920 )     (14,185 )
    TOTAL STOCKHOLDERS' EQUITY   197,301       199,468  
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 467,904     $ 398,331  
             

 
LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(unaudited)  
           
        Nine Months Ended  
        September 30,  
          2016       2015    
OPERATING ACTIVITIES        
  Net income $   973     $   1,272    
  Adjustments to reconcile net income to net cash used in operating activities:        
    Depreciation and amortization     11,744         10,703    
    Amortization of financing costs     513         477    
    Deferred rent     (125 )       511    
    Deferred income taxes     -          699    
    Stock compensation expense     2,115         2,314    
    Undistributed equity in (earnings) losses, net      270         169    
    Gain on disposal of fixed assets     (23 )       -     
    Loss on early retirement of debt     272         -     
  Changes in operating assets and liabilities (excluding the effects of business acquisitions)        
    Accounts receivable     (42,360 )       (2,576 )  
    Inventory     (34,552 )       (36,422 )  
    Prepaid expenses, other current assets and other assets     (412 )       (642 )  
    Accounts payable, accrued expenses and other liabilities     38,410         17,886    
    Income taxes receivable     (1,967 )       -     
    Income taxes payable     (5,246 )       (5,822 )  
        NET CASH USED IN OPERATING ACTIVITIES       (30,388 )       (11,431 )  
               
INVESTING ACTIVITIES        
  Purchases of property and equipment     (1,982 )       (4,190 )  
  Proceeds from disposition of GSI     567         -     
  Acquisitions     (9,382 )       -     
      NET CASH USED IN INVESTING ACTIVITIES     (10,797 )       (4,190 )  
               
FINANCING ACTIVITIES        
  Proceeds from Revolving Credit Facility     200,144         213,625    
  Repayments of Revolving Credit Facility     (136,175 )       (187,267 )  
  Repayment of Credit Agreement Term Loan     (23,000 )       (7,500 )  
  Proceeds from Short Term Loan     118         37    
  Payments on Short Term Loan     (248 )       (803 )  
  Payment of financing costs     (13 )       -     
  Payment for capital leases     (55 )       -     
  Payments of tax withholding for stock based compensation     (74 )       -     
  Proceeds from exercise of stock options     1,217         843    
  Cash dividends paid      (1,804 )       (1,557 )  
      NET CASH PROVIDED BY FINANCING ACTIVITIES       40,110         17,378    
               
Effect of foreign exchange on cash     (225 )       (546 )  
               
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (1,300 )       1,211    
Cash and cash equivalents at beginning of period     7,131         5,068    
CASH AND CASH EQUIVALENTS AT END OF PERIOD $   5,831     $   6,279    
               

 
LIFETIME BRANDS, INC. Supplemental Information(In thousands)
   
    Consolidated EBITDA for the Four Quarters Ended September 30, 2016
Three months ended September 30, 2016                                                                               $   16,652  
Three months ended June 30, 2016     5,206  
Three months ended March 31, 2016     268  
Three months ended December 31, 2015     23,889  
  Total for the four quarters $   46,015  
     
    Consolidated EBITDA for the Four Quarters Ended September 30, 2015  
Three months ended September 30, 2015 $   14,089  
Three months ended June 30, 2015     4,388  
Three months ended March 31, 2015     2,519  
Three months ended December 31, 2014     20,918  
  Total for the four quarters $   41,914  

 
Reconciliation of GAAP to Non-GAAP Operating Results    
     
Consolidated EBITDA:    
                       
      Three Months Ended    
      September 30,   2016   June 30,   2016   March 31, 2016   December 31, 2015    
Net income (loss) as reported $   6,452     $   (1,191 )   $   (4,288 )   $   11,006      
  Subtract out:                  
    Undistributed equity in (earnings) losses, net     138         (18 )       150         (517 )    
  Add back:                  
    Income tax provision (benefit)     2,961         (473 )       (2,270 )       5,962      
    Interest expense      1,231         1,122         1,193         1,402      
    Loss on early retirement of debt     -          272         -          -       
    Depreciation and amortization     4,682         3,578         3,484         3,500      
    Stock compensation expense     825         487         803         2,972      
    Contingent consideration      -          -          -          (876 )    
    Permitted acquisition related expenses     363         369         555         3      
    Restructuring expenses     -          1,060         641         437      
Consolidated EBITDA  $   16,652     $   5,206     $   268     $   23,889      
                       
           
LIFETIME BRANDS, INC.  Supplemental Information (In thousands) Reconciliation of GAAP to Non-GAAP Operating Results (continued)  
           
Consolidated EBITDA:  
           
      Three Months Ended    
      September 30,   2015   June 30,   2015   March 31, 2015   December 31, 2014    
Net income (loss) as reported $   5,104     $   (1,727 )   $   (2,105 )   $   9,261      
  Subtract out:                  
    Undistributed equity in (earnings) losses, net     459         (2 )       (288 )       1,364      
  Add back:                  
    Income tax provision (benefit)     2,745         (717 )       (1,363 )       5,473      
    Interest expense      1,454         1,459         1,431         1,658      
    Loss on early retirement of debt     -          -          -          27      
    Financing expense     -          -          154         758      
    Depreciation and amortization     3,510         3,638         3,555         3,572      
    Stock compensation expense     791         773         750         2,360      
    Contingent consideration      -          1,545         147         (4,115 )    
    Permitted acquisition related expenses, net of recovery     26         (581 )       238         560      
Consolidated EBITDA  $   14,089     $   4,388     $   2,519     $   20,918      

Consolidated EBITDA is a non-GAAP measure that the Company defines as net income (loss), adjusted to exclude undistributed equity in earnings (losses), income taxes, interest, losses on early retirement of debt, depreciation and amortization, stock compensation expense, intangible asset impairment, 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 common share:
           
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
      2016       2015       2016       2015    
                   
Net income as reported $   6,452     $   5,104     $   973     $   1,272    
  Adjustments:                
  Contingent consideration     -          -          -          1,545    
  Acquisition related expenses (recoveries), net     363         26         1,287         (385 )  
  Depreciation expense adjustment     1,327         -          1,327         -     
  Financing expenses     -          -          -          154    
  Loss on early retirement of debt     -          -          272         -     
  Restructuring expenses     -          -          1,701         -     
  Deferred tax for foreign currency translation for Grupo Vasconia     62         756         517         1,331    
  Income tax effect on adjustments     (676 )       (10 )       (1,835 )       (526 )  
Adjusted net income $   7,528     $   5,876     $   4,242     $   3,391    
Adjusted diluted income per common share $   0.51     $   0.41     $   0.29     $   0.24    

Adjusted net income in the three and nine months ended September 30, 2016 excludes acquisition related expenses, a charge to correct accumulated depreciation balance relating to certain leasehold improvements at one of the Company's U.S. warehouses , loss on early retirement of debt, restructuring expenses and deferred tax expense related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income. Adjusted net income in the three and nine months ended September 30, 2015 excludes the fair value adjustment of certain contingent consideration, acquisition related expenses, the recovery of acquisition related expenses for an acquisition not completed, financing expenses and deferred tax expense related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income.
LIFETIME BRANDS, INC.  Supplemental Information (In thousands) Reconciliation of GAAP to Non-GAAP Operating Results (continued)
                         
      As Reported   Constant Currency (1)                
    Three Months Ended     Three Months Ended         Year-Over-Year  
    September 30,   September 30,       Increase (Decrease)
  Net sales   2016       2015     Increase (Decrease)     2016       2015     Increase (Decrease)   Currency Impact   Excluding Currency   Including Currency   Currency Impact
  U.S. Wholesale $   139,607     $   130,588     $   9,019     $   139,607     $   130,594     $   9,013     $   6         6.9       6.9       - 
  International     26,736         28,812         (2,076 )       26,736         25,513         1,223         (3,299 )       4.8       (7.2 )%       (12.0 )%
  Retail Direct     3,781         3,798         (17 )       3,781         3,798         (17 )       -          (0.4 )%       (0.4 )%       - 
     Total net sales $ 170,124     $ 163,198     $ 6,926     $ 170,124     $ 159,905     $ 10,219     $ (3,293 )     6.4     4.2     (2.2 )%
                                         
                                         
      As Reported   Constant Currency (1)                
    Nine Months Ended     Nine Months Ended         Year-Over-Year  
    September 30,   September 30,       Increase (Decrease)
  Net sales   2016       2015     Increase (Decrease)     2016       2015     Increase (Decrease)   Currency Impact   Excluding Currency   Including Currency   Currency Impact
  U.S. Wholesale $   314,613     $   311,710     $   2,903     $   314,613     $   311,615     $   2,998     $   (95 )       1.0       0.9       (0.1 )%
  International     71,969         76,641         (4,672 )       71,969         70,985         984         (5,656 )       1.4       (6.1 )%       (7.5 )%
  Retail Direct     12,517         13,439         (922 )       12,517         13,439         (922 )       -          (6.9 )%       (6.9 )%       - 
     Total net sales $ 399,099     $ 401,790     $ (2,691 )   $ 399,099     $ 396,039     $ 3,060     $ (5,751 )     0.8     (0.7 )%     (1.5 )%
                                         

(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.

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Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX